Gold prices eased on Tuesday after gaining more than 1 percent in the previous session, even as a sell-off in global equities amid concerns over a trade war between China and the United States continued to support the safe-haven metal.
Spot gold was down 0.2 percent at $1,338.51 per ounce as of 0324 GMT. It climbed 1.3 percent on Monday in its biggest one-day percentage gain in a week. U.S. gold futures eased 0.3 percent to $1,342.80 an ounce.
Gold is down most likely due to Chinese investors getting out of their positions ahead of holidays on Thursday and Friday, said MKS trader Sam Laughlin.
The three-day Qingming tomb-sweeping festival in China starts on April 5.
The risk-averse sentiment in the market, however, underpinned bullion, often seen as an alternative investment during times of political and financial uncertainty.
“Gold prices at this moment serve for investors risk aversion demand and gold for the immediate short term will be well supported because of the volatility in the equity markets,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“The previous $1,300 to $1,350 trading range for gold price could gradually move up to $1,330 to $1,380 because of the risk aversion.”
Asian stocks extended a global selloff and the yen rose as investors fled for safety as an escalating trade spat between the United States and China and a renewed slump in tech shares such as Amazon.com sapped investor confidence.
“Trade war risk isn’t about to leave anytime soon as China escalation appears to have more bite than bark as there’s growing fear this could escalate,” said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.
“As the market continues to go through the exercise of what if, the fear of the unknown will continue to support Gold prices.”
The Trump administration this week will unveil a list of advanced technology Chinese imports targeted for U.S. tariffs to punish Beijing over technology transfer policies, a move expected to intensify trade tensions between the world’s two largest economies.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.73 percent to 852.31 tonnes on Monday from 846.12 tonnes on Thursday.
Among other precious metals, spot silver fell 0.3 percent to $16.56 an ounce, having risen 1.8 percent in the previous session. Platinum was down 0.2 percent at $927.50 an ounce.
Palladium was on track for an eighth straight session of losses, down 0.6 percent at $928.80 per ounce. The metal on Monday fell to as low as $928, its lowest since October 10.