January 8, 2019 / 1:07 AM / 11 days ago

PRECIOUS-Gold holds steady as Fed rate pause bets weigh on dollar

BENGALURU, Jan 8 (Reuters) - Gold held steady on Tuesday as bets on a pause in U.S. rate hikes and hopes of a Sino-U.S. trade deal put pressure on the dollar, but an improved risk appetite limited gains for the safe haven metal.

FUNDAMENTALS

* Spot gold was little changed at $1,288.36 by 0047 GMT. It hit a more than 6-month peak at $1,298.42 on Friday.

* U.S. gold futures were also steady at $1,289.50 per ounce.

* Spot palladium hit a record high at $1,313.24 per ounce on Monday and was trading at a premium to gold. The metal, used mainly in emissions-reducing catalysts for vehicles, has risen as the market suffers from a sustained deficit due to supply shortages and higher demand.

* The dollar was under pressure from growing expectations the U.S. Federal Reserve will either pause or halt its interest rate hike cycle, with the euro and Swiss franc leading gains among its rivals.

* A weaker U.S. dollar makes dollar-denominated gold more affordable for buyers using other currencies.

* On Friday, Fed chief Jerome Powell told the American Economic Association the Fed is not on a preset path of rate hikes and it will be sensitive to the downside risks markets are pricing in.

* The Federal Reserve may only need to raise interest rates once in 2019, Atlanta Fed President Raphael Bostic said on Monday, focusing on business executives’ nervousness about the economy and a global slowdown as factors that may hold the U.S. central bank back.

* U.S. officials are meeting their counterparts in Beijing this week for the first face-to-face talks since U.S. President Donald Trump and Chinese President Xi Jinping agreed in December to a 90-day truce in a trade war that has roiled global markets.

* U.S. Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that “we can live with.”

* Asian shares extended their rebound for a third day on Tuesday as investors bet that Washington and Beijing might inch towards a trade deal and that U.S. Federal Reserve would halt its tightening if economic growth slows further.

* Holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell 0.18 percent to 796.78 tonnes on Monday from 798.25 tonnes on Friday.

* India raised its gold holdings by 6.54 tonnes to 598.59 tonnes in 2018 November, according to International Monetary Fund data.

* China gold reserves rose to 59.560 million fine troy ounces at end-December, the first increase since October 2016, central bank data showed on Monday. (Reporting by Nallur Sethuraman in Bengaluru; editing by Richard Pullin)

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