Gold climbs to eight-month peak

Bengaluru — Gold prices edged up on Wednesday to hit their highest since May, supported by uncertainty over US-China trade relations and the expectation the US Federal Reserve will keep rates on hold later in the day.

Spot gold was up 0.2% at $1,313.91/oz by 2.45am GMT, after touching its highest since May 15 at $1,314.10 early in the session. US gold futures rose 0.3% to $1,312.30/oz.

“For the short-term gold is going to move higher as the Federal Reserve will have a dovish tone, which should weaken the dollar and give gold a bit of a move up,” said INTL FCStone analyst Edward Meir.

The absence of an agreement in US-China trade talks should also benefit gold, he said.

Investors are waiting on the Federal Reserve’s policy decision later in the day, with expectations officials will reinforce their recent dovish stance given a stalemate on global trade, signs of a slowdown in the US economy, and waning business and consumer confidence.

The Fed raised interest rates four times in 2018.

Investors are also concerned that criminal charges against China’s Huawei for violating US sanctions against Iran could complicate US-China trade talks.

Chinese Vice-Premier Liu is due to meet US trade representative Robert Lighthizer later in the day.

“Gold also looks good on the charts.… Physical demand seems to be improving in some markets and ETF [exchange-traded fund] buying has been increasing. In general the path of least resistance is probably higher from here,” Meir said.

Underscoring investor interest in the bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, rose 1% to 823.87 tons on Tuesday, to their highest since June.

SPDR gold holdings have risen 4.6% so far in January, their best since September 2017.

“A combination of falling treasury yields, anxiety over Brexit and Venezuela is all helping gold,” said Nicholas Frappell, global general manager at ABC Bullion.

British legislators rejected most amendments that aimed to keep Britain from leaving the EU without a deal, reviving worries of a chaotic withdrawal from the trading bloc that would damage the UK economy.

Silver rose 0.3% to $15.88/oz, having hit its highest since July 2018 at $15.92 in the prior session.

Palladium fell 0.2% to $1,343.50, while platinum was up 0.4% at $813.

Reuters