November 25, 2019 / 10:50 AM / 17 days ago

PRECIOUS-Gold dips as trade deal optimism benefits riskier assets

    * Spot gold may test support at $1,455/oz - technicals
    * Palladium hits more than two-week high
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Eileen Soreng
    Nov 25 (Reuters) - Gold edged down to a one-week low on
Monday after the United States and China expressed willingness
to sign an initial trade deal by year-end, boosting market
sentiment and driving investors to higher-risk assets. 
    Having fallen for the previous three sessions, spot gold
       was down 0.3% at $1,457.03 per ounce at 1201 GMT, after
earlier touching its lowest since Nov. 18 at $1,455.90. U.S.
gold futures         were down 0.5% at $1,456.90.
    "The ultimate threat of a full escalation into a trade war,
with bans and boycotts, is off the radar screen at least for the
moment," Julius Baer analyst Carsten Menke said.
     "The markets are being comforted by recent (trade)
developments. That's why equities are high," he said, adding
firmer stock markets are keeping gold prices range-bound between
$1,450-$1,480.
    European shares rose for the second straight session
following reports that Washington and Beijing were very close to
an initial trade deal.                               
    Adding to the positive mood around the trade negotiations
was the weekend announcement that China would seek to improve
protections for intellectual property rights, a move seen to
address a sticking point between the parties.             
    Investors were still cautious on trade talks, with U.S. and
Beijing officials, lawmakers and trade experts saying an
ambitious "phase two" trade deal looked less likely.
             
    "There is no major selling in the gold market, which might
suggest that people are still sceptical about these
developments," Menke said. "They see them as some sort of
temporary relief, not a real longer-term solution."
    Gold, considered a safe asset in times of political and
economic uncertainty, has gained more than 13% this year, mainly
due to the tariff dispute and its impact on global economic
growth.
    Factors including heightened political uncertainty and an
only modest acceleration in growth are likely to support
investment in gold, Goldman Sachs said in a research note,
maintaining its bullish 2020 target of $1,600 per ounce.
            
    Meanwhile investors kept an eye out for U.S. Federal Reserve
Chair Jerome Powell's speech later on Monday. He is expected to
reiterate a steady outlook for rates after better-than-expected
manufacturing output and services activity data on Friday. 
    Spot gold may test support at $1,455 per ounce, a break
below which could cause a fall to $1,440, according to Reuters
technical analyst Wang Tao.             
    Silver        fell 0.9% to $16.86 per ounce, after touching
its lowest in a week.
    Palladium        rose 0.6% to $1,786.62 per ounce, having
earlier hit its highest since Nov. 8 at $1,789.96. Platinum
       was steady at $891.34.

 (Reporting by Eileen Soreng in Bengaluru; Editing by Jan Harvey
and Jane Merriman)
  
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