NEW YORK (Scrap Register): Gold is facing conflicting signals – increased trade tensions could help the U.S. dollar, which hurts gold, but the metal could be underpinned by signs of another sell-off in the stock market, said TD Securities.

The most active February gold contract on the COMEX division of the New York Mercantile Exchange gained by $1 to settle at $1,243.60 an ounce on Thursday, It had touched a high of $1,249.90, teasing the highest for a most-active contract since the first half of July.

A Chinese business executive was arrested in Canada and faces extradition to the U.S., potentially inflaming trade relations between the U.S. and Canada again, according to news reports.

“Recent strength in precious metals, due to a weaker U.S. dollar in combination with a stronger Chinese currency, could be unwound as trade tensions spark again — but weakness in equities and a flat yield curve should add support to the complex,” said TDS.

“We do not expect trend follower[s] to significantly shift positioning, with prices above the $1200/oz level for gold, but silver is in range for additional CTA [Commodity Trading Adviser] selling near $14.30/oz,” TDS added.