Gold prices edged higher on Thursday, as the dollar eased from 6-1/2-month highs hit earlier this week, with the prices further supported by concerns over US-China trade.

Spot gold was up 0.1 per cent at $1,302.50 per ounce by 0344 GMT. It was headed for a monthly decline of about 1 per cent, its biggest since February. US gold futures for June delivery were 0.1 per cent higher at $1,303.20 per ounce.

“Gold is largely being influenced by how the dollar is moving and the dollar move overnight is a clear representation of why gold prices have risen this morning,” said OCBC analyst Barnabas Gan.

Dollar index

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.1 per cent to 94.027. A weaker dollar makes bullion cheaper for the holders of other currencies.

“Prices are still very dependent on how risk aversion is playing up and the global news surrounding the US-Sino trade tensions as well as the possibility of a North Korea summit, that uncertainty is a big driver for gold prices,” Gan added.

China had said on Wednesday it was ready to fight back if Washington was looking for a trade war, days ahead of a planned visit by US Commerce Secretary Wilbur Ross.

US-North Korea summit

Meanwhile, US and North Korean officials met in New York late on Wednesday in the first of two days of talks about the future of Pyongyang's nuclear weapons programme and a possible summit between US President Donald Trump and North Korean leader Kim Jung Un.

“Some weaker than expected economic data in the U.S. also helped boost investor demand (for gold),” ANZ said in a note.

US economic growth

US economic growth slowed slightly more than initially thought in the first quarter as consumer spending rose at its weakest pace in nearly five years.

However, tensions over Italy cooled as the country's two main anti-establishment parties renewed efforts to form a government, reducing the prospect of a general election, which had stoked fears that such a vote will effectively be a referendum on the country's euro membership.

In other precious metals, spot silver was steady at $16.51 an ounce, set to rise over 1 per cent this month. Platinum fell 0.2 per cent to $904.94 an ounce but was headed for a small monthly gain. Palladium was steady at $985.40 an ounce and was headed for its biggest monthly gain since December, climbing over 2 per cent.

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