Gold Edges Up, Settles At 1-week High

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Gold prices edged higher on Wednesday, as the dollar stayed a bit sluggish against most major currencies.

Concerns about the U.S. - China trade war continued to weigh on the market. After the U.S. imposed a 10% tariff on about $200 billion worth Chinese goods that come into U.S., China retaliated by imposing tariffs on $60 billion worth of U.S. goods, effective September 24th.

In addition, speculation is rife that China will increase economic stimulus to soften the blow of the higher U.S. tariffs.

The dollar index was down 0.10 points or 0.11%, at 94.12.

Gold futures for December ended up $5.40, or about 0.5%, at $1,208.30 an ounce, the highest settlement price in a week. On Tuesday, gold futures ended down $2.90, or 0.2%, at $1,202.90 an ounce.

Silver futures for December ended up $0.095, at $14.280 an ounce, while Copper futures closed lower by $0.0010, at $2.7295 per pound.

The fact that the tariff, at 10%, is much lower than what was mentioned earlier, and the Chinese Premier Li Keqiang's remarks at a World Economic Forum conference that disputes must be resolved through consultation, have raised hopes that the two largest economies in the world might get together for a fresh round of trade talks sometime soon. Kequiang reportedly said that it was "essential that we uphold the basic principles of multilateralism and free trade".

Meanwhile, traders look ahead to the Federal Reserve's monetary policy decision, scheduled to be announced next Wednesday (September 26). It is widely expected that the central bank would hike interest rate by 25 basis points.

In economic news today, data released by the Commerce Department showed a sharp increase in new residential construction in the U.S. in the month of August, although the report also showed a steep drop in building permits during the month.

The Commerce Department said housing starts spiked by 9.2% to an annual rate of 1.282 million in August from the revised July estimate of 1.174 million. Economists had expected housing starts to jump by 5.7% to a rate of 1.235 million from the 1.168 million originally reported for the previous month.

Meanwhile, the report said building permits tumbled by 5.7% to an annual rate of 1.229 million in August from a revised 1.303 million in July.
 
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