January 13, 2020 / 11:35 AM / 4 days ago

PRECIOUS-Gold slips 1% ahead of U.S.-China trade deal

 (Updates prices)
    * U.S., China due to sign trade deal on Wednesday
    * SPDR Gold holdings fall to lowest since Sept. 16 on Friday

    By K. Sathya Narayanan
    Jan 13 (Reuters) - Gold prices fell 1% on Monday as optimism
in equity markets ahead of the signing of an interim U.S.-China
trade deal and lack of further escalation in Middle East
tensions diminished bullion's safe-haven appeal.
    The U.S.-China Phase 1 agreement is due to be signed at the
White House on Wednesday.             
    Spot gold        dipped 0.5% to $1,553.60 per ounce as of
1246 GMT, having fallen 1% to $1,546.27 earlier in the session.
    U.S. gold futures         fell 0.4% to $1,554.50.
    "We are struggling (a) little bit with the details. It'll be
quite interesting to see if there is any concrete guidance in
the details of the phase-one deal," said Julius Baer analyst
Carsten Menke.
    "Also, the news that the Chinese and the U.S. would meet on
semi-annual basis to discuss trade, I imagine was something
which wasn't expected by the market, and could be weighing on
gold."
    A Wall Street Journal report said on Saturday Washington and
Beijing had agreed to semi-annual talks aimed at pushing for
reforms in both countries and resolving disputes.             
    The positive sentiment ahead of the planned signing boosted
global equities, which were hovering just below record levels,
while the U.S. dollar gained against key rivals.            
      
    Stronger appetite for riskier assets weighs on
greenback-denominated gold.
    Bullion rose to a near 7-year peak of $1,610.90 last week
after a U.S. drone strike killed a top Iranian commander in
Baghdad and Iran launched missiles against U.S. bases in Iraq in
retaliation.
    The rally, however, faded with a lack of further military
escalation in the region.                         
    The United States imposed more sanctions on Iran on Friday
and vowed to tighten the economic screws if Tehran continued
"terrorist" acts or pursued a nuclear bomb.              
    "The tensions between U.S. and Iran seems to have calmed
down a little bit, at least for the time being, and people are
just taking profits on that," said Afshin Nabavi, senior vice
president at precious metals trader MKS SA.
    Reflecting investor sentiment, holdings of the world's
largest gold-backed exchange-traded fund, SPDR Gold Trust      ,
fell 0.9% to 874.52 tonnes on Friday, their lowest since Sept.
16.          
    On the technical front, gold is testing the support level of
$1,550 and a fall below that would be a negative signal, opening
space for further declines, Carlo Alberto De Casa, Chief analyst
at ActivTrades said in a note.
    Elsewhere, palladium        rose 1.2% to $2,142.52 an ounce.
Silver        was down 0.5% at $18, while platinum        fell
0.5% to $973.32.

 (Reporting by K. Sathya Narayanan in Bengaluru; editing by
Emelia Sithole-Matarise and Louise Heavens)
  
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