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Gold prices fell to one-week low yesterday as bonds rallied and the dollar hovered near a two-year high, offsetting the support for bullion from an increasingly bitter Sino-US trade dispute that rekindled doubts about global economic growth.

Spot gold was down 0,3percent at $1 275,59 per ounce, as of 0715 GMT, after falling to its lowest since May 23 at $1 274,95.
US gold futures edged 0,5percent lower to $1 274,70 an ounce.

“Investors look like they prefer US Treasuries as a safe haven for now, evident by the inverted U.S yield curve,” Howie Lee, an economist at OCBC Bank, said.

“A strong dollar is also likely impeding big players such as China and India from consuming too much (of gold).”
The dollar held steady against its key rivals on Thursday as escalating Sino-US trade tensions forced investors into the shelter of safe-haven assets, including government bonds.

Against a basket of six major currencies, the dollar was steady at 98 222, hovering within the reach of a two-year high of 98,371 hit a week ago. The index is up more than 2percent for the year.

Asian stocks tracked Wall Street losses yesterday as latest exchanges between Beijing and Washington signalled the heightened risk of a prolonged trade war.

Provoking trade disputes is “naked economic terrorism”, a senior Chinese diplomat said yesterday, ramping up the rhetoric against the United States amid a bitter trade war that is not showing any signs of ending soon.
Bullion seems to have found a base around $1 270 even though it has failed to break much higher, analysts said.
“With bond yields so low and weakening equity markets, gold could find support. “ — Reuters.