· Gold inched up on Tuesday amid growing fears of a coronavirus resurgence in some countries and prospects of Sino-U.S. tensions flaring further, though gains were capped by a stronger dollar.
Spot gold edged up 0.1% to $1,698.09 per ounce by 0617 GMT. U.S. gold futures climbed 0.4% to $1,704.10 per ounce.
· The new wave of infections is "priced through the fact that markets are looking at negative (U.S.) interest rates," ANZ analyst Daniel Hynes said, adding that the market was expecting some additional support from the Federal Reserve.
However, "we have (also) had a little bit of a rally in the U.S. dollar which certainly crimps investor appetite."
· The dollar index climbed to a more than two-week high against key rivals on higher safe-haven demand and bond yields, making gold costlier for investors holding other currencies.
Fed officials talked down the prospect of negative rates, after traders in futures tied to the policy rate last week began pricing in -- for the first time ever -- a small chance of negative interest rates next year.
Highlighting strained relationship with China, U.S. President Donald Trump said he was "not interested" in re-negotiating the "Phase 1" trade deal after a Chinese state-run newspaper indicated discontent about it in Beijing.
· "The U.S.-China trade issues are back into the picture," said Hareesh V, head of commodity research at Geojit Financial Services.
Market participants are increasingly becoming anxious about a second wave of infections as more countries around the world gradually ease restrictions in an effort to restart their economies.
The Chinese city of Wuhan, where the pandemic originated, reported its first new cases since its lockdown was lifted - raising concerns about a second wave of infections and sending Asian shares skidding.
Japan could end a state of emergency in many regions this week if new virus infections are under control.
Globally, an estimated $15 trillion worth of stimulus has already been unleashed to cushion the blow from the pandemic.
· Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.05% to 1,081.07 tonnes on Monday.
· Gold Price Analysis: Yellow metal forms a bull pennant
Gold looks to have formed a bullish pennant pattern on the daily, which comprises trendlines connecting higher lows and lower highs.
The compression essentially represents a bull-bear tug of war. It is considered a bullish continuation pattern if its formation is preceded by a notable price gain, which is the case here.
The yellow metal rose from $1,455 to $1,747 during the three weeks to April 14 before carving out the contracting triangle. Such pennants usually end up paving the way for a stronger rally.
A close above the top end of the pennant at $1,720 would imply a continuation of the rally from $1,455 and put the focus on the 2020 high of $1,747 clocked on April 14. On the flip side, a move below $1,681 would confirm a pennant breakdown or a bullish-to-bearish trend change and expose the 50-day average support at $1,650. At press time, the yellow metal is trading in a sideways manner around $1,695 per ounce.
· Among other precious metals, palladium slipped 0.7% to $1,881.54 per ounce and silver fell 0.8% to $15.42, while platinum rose 0.7% to $761.94.
Reference: Reuters, FX Street
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