Gold becalmed on doubts over U.S.-China trade deal as dollar firms

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    (Reuters) – Gold prices were little changed on Wednesday after U.S. President Donald Trump dashed investors’ hopes for a positive sign on a U.S.-China trade deal with a speech that gave away little, while a firmer dollar limited upside for bullion.

    FILE PHOTO: Melted gold flows out of a smelter into a mould of a one kilogram bar at a plant of gold refiner and bar manufacturer Argor-Heraeus SA in the southern Swiss town of Mendrisio November 13, 2008. REUTERS/Arnd Wiegmann

    Spot gold XAU= was trading at $1,458.59 per ounce by 0356 GMT, while U.S. gold futures rose 0.4% to $1,459.10 per ounce.

    U.S. and Chinese negotiators were “close” to a “phase one” trade deal, Trump said in Tuesday’s speech to the Economic Club of New York, but offered no new details on negotiations.

    “The downtrend (in gold) has paused. President Trump, on one hand, said the deal was closing and, on the other hand, said he will raise the tariffs if a deal is not reached,” said Michael McCarthy, chief market strategist at CMC Markets.

    “This didn’t help the trade situation but supported gold.”

    He added that the narrow trading range in gold reflected uncertainty, leading traders to start wondering whether a promised “phase one” agreement would be achieved.

    Limiting gold’s upside, the dollar clung to most of its recent gains and was hovering near a month high, making bullion expensive for holders of other currencies.

    Asian stocks and Wall Street futures fell on growing worries that U.S.-China trade talks are stalling after Trump failed to deliver any new information.

    Gold, considered a safe store of value during economic and political uncertainty, has risen about 13% this year on concerns over the trade war and monetary policy easing by central banks.

    Later in the day, Fed Chairman Jerome Powell is set to testify on the economic outlook before the congressional Joint Economic Committee.

    Political unrest in the Asian financial hub of Hong Kong provided support for the precious metal, as police battled pro-democracy protesters at several university campuses in the Chinese-ruled city.

    “Slowing economic growth, geopolitical risk and an easing interest rate cycle remain the reality,” ANZ Bank said in a note. “And such a backdrop should support gold investment demand through 2020.”

    Reflecting sentiment, holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust fell to their lowest since Sept. 20 on Tuesday.

    Palladium XPD= was up 0.1% at $1,701.15 an ounce.

    “Palladium should hold its premium over other metals, amid a sustained deficit backdrop,” ANZ said. “Stricter emission regulations are driving palladium demand, despite the struggling auto sector.”

    Silver XAG= rose 0.5% to $16.85 per ounce, and platinum XPT= gained 0.2% to $870.26.

    Reporting by Sumita Layek and Diptendu Lahiri in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu



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