Investing.com - Gold prices gained in Asia on Thursday after an initial small gain in the dollar index was reversed and favored physical buying of the greenback-denominated commodity with investors still pondering an apparent switch in the US strong dollar policy by the US Treasury Secretary Steven Mnuchin overnight.
Gold futures for February delivery on the Comex division of the New York Mercantile Exchange rose 0.19% to $1,358.90 a troy ounce. The US dollar index fell 0.06% to 88.97.
Mnuchin will have the chance Thursday to offer any clarification on a change from a long-standing strong dollar policy as part of a panel at 11 a.m. CET at Davos that includes IMF Managing Director Christine Lagarde.
Overnight, gold prices rose sharply on Wednesday supported by a slump in the dollar while growing fears of a US-China trade war fuelled a modest uptick in safe-haven demand.
The dollar came under heavy selling pressure falling nearly 1%, boosting demand for the gold, after Treasury Secretary Steven Mnuchin signalled his endorsement of a low dollar.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities," Mnuchin told reporters in Davos, according to Bloomberg.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – a decline in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand.
Meanwhile, renewed geopolitical uncertainty triggered modest safe-haven demand, which further supported upside momentum in the yellow metal.
Commerce Secretary Wilbur Ross claimed that China’s tech ambitions under its 2025 were a “direct threat” that is being implement “by disrespect for intellectual property rights” among other “very bad things.”
Ross’s comments come amid growing investor expectations that President Trump will impose a bevy of steeper tariffs on steel, aluminium and intellectual property.