January 14, 2020 / 4:17 PM / 11 days ago

PRECIOUS-Gold dips as trade deal signing nears, palladium hits record high

 (Updates prices)
    * Palladium hits record high of $2,191.60
    * Silver drops to lowest since late December
    * HSBC sees heavy structural supply/demand deficits for
palladium

    By Harshith Aranya
    Jan 14 (Reuters) - Gold fell on Tuesday ahead of the much
awaited signing of an interim U.S.-China trade deal that
dampened the appeal of bullion, while palladium notched a record
high on a sustained supply deficit.
    Spot gold        dipped 0.1% to $1,546.48 an ounce by 1:44
p.m. EST (1844 GMT) after touching the lowest since Jan. 3 at
$1,535.63. U.S. gold futures        settled down 0.4% at
$1,544.60.
    "The main thing is that a week ago we had the Iran-U.S.
news, that caused a pretty significant rally in gold; and now
that news has subsided," said Bob Haberkorn, senior market
strategist at RJO Futures.
    "The U.S.-China deal is also supposed to get signed
tomorrow. So, the fact that two big drivers for gold in the
geo-political front have kind of come and gone, so gold sold off
here."
    Bullion rose to its highest in nearly seven years last week
on worries over a potential U.S.-Iran military conflict, but the
rally faded in the absence of any escalation in tensions.
    Analysts said investors are still taking profits after the
massive spike in prices.
    "That has also been noted in the exchange-traded funds
market, where there have been some quite sizeable reductions
since we reached that high," Saxo Bank's Ole Hansen said.
         
    Signaling a further ramp down in trade tensions, the U.S.
Treasury on Monday dropped China's designation as a currency
manipulator, fuelling market optimism.             
    Global equities markets stalled near record highs ahead of
the signing of the trade deal.            
    U.S. consumer prices rose slightly less than expected in
December and monthly underlying inflation pressures retreated,
which could allow the U.S. central bank to keep interest rates
unchanged at least through 2020.             
    Also on investors' radar is the Federal Reserve's Beige
Book, a summary of commentary on economic conditions, due on
Wednesday.
    Palladium hit a record high of $2,191.60 an ounce, and was
on track for a ninth straight session of gains. The
auto-catalyst was up 2.7% at $2,189.77.
    For 2020/21, "we forecast heavy structural supply/demand
deficits for palladium," James Steel, chief precious metals
analyst at HSBC, wrote in a note.
    "Likely robust automotive demand will help keep the market
tight. Tighter emissions regulations globally imply heavier
palladium auto catalyst loadings."
    Silver        was down 1% at $17.78 after hitting its lowest
since Dec. 24 at $17.64, while platinum        rose 0.9% to
$982.26.

 (Reporting by Harshith Aranya and K. Sathya Narayanan in
Bengaluru
Editing by Marguerita Choy and Richard Chang)
  
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