Gold futures finished higher for a second consecutive session on Wednesday, but pared much of their earlier gains as traders tracked moves in the benchmark dollar index, the latest developments in the U.S.-China trade dispute and efforts to avoid another partial U.S. government shutdown.
"The 'risk-on' vibe sweeping across global markets and the stabilizing U.S. dollar are bad news for gold which tends to shine in times of uncertainty," said Lukman Otunuga, research analyst at FXTM. But "gold has nothing to worry about in the longer term given the unfavorable market conditions and geopolitical risks bubbling in the background.
"With concerns over slowing global growth on the mind of many investors, Brexit drama, China slowdown fears and many other negative themes floating in the air, gold bulls are safe," he said in a note.
April gold GCJ9, -0.34% edged up $1.10, or less than 0.1%, to settle at $1,315.10 an ounce. The most-active contract had traded as high as $1,321.70. The SPDR Gold Shares ETF GLD, -0.40% added less than 0.1%.
The ICE U.S. Dollar IndexDXY, -0.04% a measure of the U.S. currency against a basket of six major rivals, was up 0.3% at 97.035.
Gold has gained almost 3% since the end of last year based on the most-active contract as uneasy trade progress, grouped with a series of global growth downgrades and an expected pause in Federal Reserve rate-hike policy sent investors to seek cover in lower-risk pockets of the financial markets. Moderating inflation signals and global issues have influenced the Fed's mood shift.
Philadelphia Federal Reserve President Patrick Harker said Wednesday his outlook for the economy suggests the central bank can continue to inch interest rates higher this year and next. That followed a prediction from Atlanta Federal Reserve President Raphael Bostic Tuesday that the Fed will raise rates just once in 2019.
On Wednesday, the U.S. consumer-price index report suggested inflation remains non-problematic. The index was flat last month.
The lower-than-expected reading "will assist with putting off the FOMC from leaning toward further tightening anytime soon," said Jeff Wright, executive vice president of GoldMining Inc. He said gold could trade toward $1,325 in the near term.
Gold settled with a gain on Tuesday when the dollar paused its stretch of eight straight wins. News that U.S. congressional negotiators reached a tentative deal to prevent a government shutdown supported the stock market, limiting gains for haven gold. The deal still requires approval from President Donald Trump.
And developments on the trade-negotiations front also briefly dulled demand for the haven asset. President Trump said Tuesday that he would allow for flexibility on a the timeline for a deal with China if an agreement looks close. A third day of bilateral trade negotiations were under way in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer expected Thursday for more high-level discussions.
In other metals trade, March silver SIH9, -0.59% fell 0.2% to $15.652 an ounce. March copper HGH9, +0.07% edged up by a fraction of a penny to $2.773 a pound.
Wednesday's Need to Know column features an upbeat outlook from Morgan Stanley for copper prices and related stocks, fueled in part by analyst expectations for industry deal-making.
April platinum PLJ9, -0.45% gained 0.3% to $791.80 an ounce, while March palladium PAH9, +0.47% slipped back from record-high territory, losing 0.2% to $1,372.60 an ounce.