December 2, 2019 / 5:07 PM / 3 days ago

PRECIOUS-Gold steadies after weak U.S. data; palladium zooms past $1,860/oz

 (Updates prices)
    * Unexpected drop in U.S. construction spending in Oct.
    * Trump to restore tariffs on imports from Brazil, Argentina
    * GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl

    By Karthika Suresh Namboothiri and Eileen Soreng
    Dec 2 (Reuters) - Gold steadied on Monday after paring
losses as weak U.S. manufacturing data rekindled worries about a
slowing economy, while palladium exceeded $1,860 per ounce in
its week-long surge to new all-time highs on a supply crunch.
    Spot gold        was flat at $1,463.96 per ounce by 1:46
p.m. ET (1846 GMT). U.S. gold futures        settled 0.2% lower
at $1,469.20. 
    Gold initially fell to a low of $1,453.60 per ounce on a
stronger dollar and as better-than-expected manufacturing data
from China propped up equities.                          
    However, U.S. stock indices dropped and the dollar slipped
       on data showing an unexpected drop on construction
spending in October as investment in private projects tumbled to
a three-year low.                                        
    "Market started the day on a risk-on tone, but got caught
off guard when the ISM data was a bit weaker-than-expected. We
saw equities, yields and the dollar all correct, which has
helped gold a bit," said Ryan McKay, a commodity strategist at
TD Securities.
    World equities                 began the week on a strong
footing after a private business survey showed Chinese factory
activity expanded at the quickest pace in almost three years in
November.             
    However, markets reversed course following a report that
U.S. President Donald Trump said he would immediately restore
tariffs on U.S. steel and aluminium imports from Brazil and
Argentina.                  
    Investors favor gold during times of global uncertainty.
    "The notion is that the U.S. Federal Reserve is done cutting
(interest rates) for now and we'll need to see a trend in weaker
data through early 2020 to convince the market that we're going
to get more cuts. Until then, there's no real impetus to see
gold rally," McKay added.
    The Fed cut rates three times this year and has one more
policy setting meeting on Dec.10-11. However, investors now see
the Fed keeping interest rates unchanged until at least
mid-2020.
    Markets also awaited clarity on an interim U.S.-China trade
deal.             
    Palladium        was up 0.6% at $1,852.49 an ounce, after
hitting a new high of $1,861.71 earlier in the session. The
metal has been breaking records daily since Nov. 25.   
    "Palladium positioning is slightly counter-intuitive to the
price action, implicitly confirming heavy OTC interest from the
long side," INTL FCStone analyst Rhona O'Connell said in a note.
    "After weak longs were shaken out in early November another
push to the upside is now approaching resistance from the
uptrend."
    Concerns that supply of the metal used in car exhaust
systems could run out has helped to lift prices by more than 47%
this year alone, despite a weakening auto sector.    
    Silver        shed 0.6% to $16.92 an ounce and platinum
       edged 0.1% lower to $898.85.

    
 (Reporting by Karthika Suresh Namboothiri and Eileen Soreng in
Bengaluru; Editing by Richard Chang and Chizu Nomiyama)
  
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