Gold high but steady amid US-China trade talks standoff

Bengaluru — Gold steadied on Wednesday, hovering near a one-month high as investors awaited clarity on the US-China trade talks, while palladium soared to another all-time high on scarce supply.

Spot gold was little changed at $1,476.17 an ounce by 11.10am GMT, after hitting its highest since November 7 at $1,484 earlier in the session, while US gold futures were down 0.2% to $1,481.90 an ounce.

Washington and Beijing are moving closer to agreeing on the amount of tariffs to be rolled back in a phase-one trade deal, Bloomberg reported on Wednesday, citing sources. “Investors are cautious about what would happen if we don’t have a deal on December 15, given the headlines we’ve been seeing in the past couple of weeks,” ING analyst Warren Patterson said.

A further 15% US tariff on about $156bn worth of Chinese imports is set to take effect on December 15.

“The to and fro in the progress of the trade war has whipsawed gold markets. As we get closer to December 15, the momentum of effects of headlines will be more intensive and have the ability to make gold break several range-bound moves,” Patterson said.

European stocks recovered some of the losses made in the previous session after US President Donald Trump said a deal with China might have to wait until after the US presidential election in November 2020. Trump has also slapped tariffs on US steel and aluminium imports from Brazil and Argentina.

Safe-haven gold has risen about 15% so far in 2019, mainly due to the 17-month-old trade dispute, but had been trading in a $1,444-$1,478 range since November, which was broken on Tuesday.

The US House of Representatives, meanwhile, approved a bill that would require Washington to toughen its response to China’s crackdown on its Uighur Muslim minority, which investors fear can deteriorate trade ties.

In other metals, palladium was up 0.5% at $1,866.03 an ounce, after hitting its fifth record high in the span of a month at $1,868.69. “Given its scare supply, the higher premiums paid by car makers for physical delivery might hike prices to the $2,000 level in the longer term. After it hits that level, we might see some correction,” ING’s Patterson said.

Platinum edged down 0.2% to $908.15 an ounce and silver dipped 0.2% to $17.13 an ounce. While the platinum market will likely be oversupplied in 2020, it should latch on to gold and still trade higher to about $1,000 an ounce in 2020, analysts at UBS said in a note.

Reuters