November 22, 2019 / 4:30 PM / 21 days ago

PRECIOUS-Gold prices ease as strong U.S. data lifts dollar, yields

    * Palladium on track for best week since mid-September
    * U.S. manufacturing output, services activity pick up in
November
    * Trump says trade deal with China 'potentially very close' 

 (Updates prices)
    By K. Sathya Narayanan
    Nov 22 (Reuters) - Gold prices edged lower on Friday as the
dollar and Treasuries strengthened after data showed U.S.
manufacturing output and services activity picked up, limiting
demand for the yellow metal.
    Spot gold        was down 0.1% at $1,462.97 per ounce by
1:21 p.m. ET (1921 GMT), and was set for a 0.3% weekly loss.
    U.S. gold futures        settled unchanged at $1,463.60 per
ounce.
    U.S. manufacturing output accelerated in November to its
fastest pace in seven months and services activity also picked
up more than expected, a survey of purchasing managers showed on
Friday.             
    "Stronger data in the U.S. just strengthens the
interpretation that the Federal Reserve is going to stay on the
pause here, for the next few meetings," said Ryan McKay, a
commodity strategist at TD Securities.
    "That means rates (Treasuries) and the dollar continue to
move higher, which constrains gold."             
    The U.S. central bank, after cutting benchmark rates for the
third time this year, had emphasised that it will keep interest
rates on hold until the economy takes a downturn.
    "Fear from the long drawn out trade war seems to be losing
its sting as markets price in the possibility that no deal may
be reached in the next few months," Silver Bullion sales manager
Vincent Tie said.
    "I believe a greater catalyst to volatility in gold prices
now are the actions of the Federal Reserve to expand their
balance sheet once again."
    The metal, considered as a safe asset during times of
political and economic uncertainties, has jumped about 14% so
far this year, which could be its best year in nine, mainly
propelled by United States' trade war with China.
    U.S. President Donald Trump said that a trade deal with
China is "potentially very close" and that he stands with both
the people of Hong Kong, amid massive protests in the region,
and Chinese President Xi Jinping.
    The U.S. Congress on Wednesday passed two bills intended to
support protesters in Hong Kong and send a warning to China
about human rights, to China's displeasure.             
    "The markets are kind of pricing in just a further delay in
trade (deal). The situation is so fluid, which is frustrating,"
said Edward Moya, a senior market analyst at OANDA.
    Among other precious metals, silver        slipped 0.4% to
$17.02 per ounce, but was up for the week, while platinum       
fell 2.5% to $891.74.
    Palladium        climbed 0.8% to $1,774.05 per ounce and
with gains of more than 4% so far this week, the auto-catalyst
metal was on track for its biggest weekly increase since
mid-September.

 (Reporting by K. Sathya Narayanan in Bengaluru; Editing by Dan
Grebler and Marguerita Choy)
  
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