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Gold remains below one-month peak as shares soar on trade relief

(Reuters) - Gold eased below last session’s one-month high on Friday after reports the United States and China were close to signing a trade deal and Brexit optimism after Britain’s election result fuelled a rally in stock markets.

A sales assistant displays a 1000 gram gold bar as an investment for a customer at Caibai Jewelry store, in Beijing, China, August 6, 2019. REUTERS/Jason Lee/Files

Spot gold fell 0.1 % to $1,468.20 per ounce by 1400 GMT, but has risen about 0.6% so far this week. U.S. gold futures were flat at $1,472.80.

“Boris Johnson’s win in the UK elections has wiped away the uncertainty around Brexit and news of a U.S.-China deal going through has tamed trade war tensions,” said Quantitative Commodity Research analyst Peter Fertig.

Trade optimism lifted Wall Street to record highs, while European stock markets were within striking distance of an all-time high on Friday after British Prime Minister Boris Johnson won a resounding election victory.

Bullion denominated in British sterling slid 1.4%, having earlier fallen to 1,085.01 pounds an ounce, its lowest since June.

The United States has offered to cut existing tariffs on Chinese goods by as much as 50% and suspend new tariffs scheduled to go into effect on Sunday, sources told Reuters on Thursday.

“Until and unless the deal is signed in pen and paper, and announced at the White House press conference, uncertainty will persist and that will keep supporting gold,” Fertig added.

Gold rose to its highest since Nov. 7 on Thursday, but settled lower after trade deal reports.

The dollar was hovering close to its lowest since early July, putting a floor under gold prices.

“Notwithstanding a risk-on move with equities printing all-time highs and yields aggressively rising, the yellow metal remains resilient despite the less-optimistic tone for gold,” TD Securities said in a note.

Gold was little changed after data showed U.S. retail sales increased less than expected in November.

Elsewhere, palladium rose 2% to $1,974.55 an ounce, having notched up an all-time high of $1,979.95.

“The auto sector is gradually gaining steam and with palladium being used as an autocatalyst in cars, demand is going up, while the supply still remains a constraint,” Fertig added.

Plagued by a supply deficit, the metal has gained about 5% so far this week, predominantly supported by mine closures across major producer South Africa.

Platinum fell 0.9%, to $935.60 per ounce, but was on track to post its best week since the end of August.

Silver inched down 0.1% at $16.91 and was set to record its best weekly gain since the end of October.

Reporting by Diptendu Lahiri in Bengaluru; Editing by Mark Potter and David Evans