November 18, 2019 / 11:27 AM / a month ago

PRECIOUS-Gold slips as U.S.-China trade deal optimism boosts equities

    * Fall below $1,445 could trigger further dips for gold -
analyst
    * Investors await U.S. Fed minutes on Wednesday

 (Updates prices)
    By Asha Sistla
    Nov 18 (Reuters) - Gold fell on Monday as growing optimism
for a U.S.-China trade deal following a report of "constructive
talks" over the weekend boosted sentiment for riskier assets.
    Spot gold        fell 0.6% to $1,458.55 per ounce at 1219
GMT. U.S. gold futures         were down 0.6% at $1,459.10.
    "Everything looks a lot more positive - U.S. markets are at
record highs, trade talks are progressing a little bit slowly,
the Fed has (cut) rates three times now - it looks bearish (for
gold) compared to the kind of move we've seen over the summer,"
said Craig Erlam, OANDA senior market analyst.
    "Trend for gold in the short-term is looking quite negative.
From technicals, we have taken out all lows - $1,480 was the
most important one, now $1,460." 
    Chinese state media Xinhua reported Washington and Beijing
had a high-level phone call on Saturday and that the two sides
discussed each other's core issues for the first phase of an
initial trade agreement.             
    European shares opened higher as optimism around trade talks
and a surprise move by China's central bank in cutting a key
interest rate painted an upbeat picture about global
growth.                  
    "In all likelihood, a breakdown in trade talks remains the
only scenario to breathe new life into gold prices at this
time," Jeffrey Halley, senior market analyst, Asia Pacific at
OANDA said in a note.
    Market participants now await minutes of the Federal
Reserve's last policy meeting, due on Wednesday, for clues about
the future interest rate trajectory.
    Gold is highly sensitive to interest rates, as lower
interest reduces the opportunity cost of holding the
non-yielding bullion.
    "The scenario is now getting more complicated for bullion,
as a new fall below $1,445 would mean much more pressure from
bears, creating space for further declines. Only a solid
recovery to $1,470 can halt bullion's current weakness," Carlo
Alberto De Casa, chief analyst at ActivTrades said in a note.
    Meanwhile, investors also kept a close eye on developments
in Hong Kong, with police on Monday trapping hundreds of
protesters inside a major university and demonstrators rampaging
through a tourist district, after almost two straight days of
standoffs.             
    Gold is considered a safe store of value during times of
economic or political uncertainty.
    Among other metals, silver        was down 0.9% at $16.81
per ounce, while platinum        slipped 0.9% to $881.05 per
ounce.
    Palladium        rose 0.6% to $1,715.36 per ounce.

 (Reporting by Asha Sistla in Bengaluru, editing by Louise
Heavens)
  
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