Gold prices stay in tight range after trade deal

Bengaluru — Gold prices were rangebound on Tuesday, as lack of concrete details about the interim US-China trade deal kept investors from making firm bets, while palladium was just $2 away from surpassing key $2,000/oz level for the first time.

Spot gold was little changed at $1,476.24/oz at 4.20am GMT. US gold futures were flat at $1,480.90. Palladium rose 0.9% to $1,995.87/oz, after scaling a record peak of $1,998.

“The trade situation is improving … but the weaker dollar is counter balancing that. So, we’re seeing tight ranges for gold prices with these two factors running in opposite directions,” said Michael McCarthy, chief market strategist at CMC Markets.

The dollar index was little changed after posting losses in the previous two sessions, making gold cheaper for holders of other currencies. Investors are keen to know more about the preliminary trade deal struck between US and China last week.

“There is a real risk that when it comes to the actual [deal] document, we could see some market disappointment and that of course would be supportive for gold,” McCarthy added. The “phase 1″ trade deal has been “absolutely completed”, a top White House adviser said on Monday. However, Chinese officials have been more cautious, emphasising that the trade dispute has not been completely settled.

Gold, considered a safe investment in times of political and economic uncertainty, has gained about 15% in 2019, mainly driven by the 17-month-long tariff war and its effect on the global economy. Capping bullion’s advance, Asian shares rose to their highest in more than a year on trade deal optimism.

Among other precious metals, palladium, used mainly in catalytic converters in vehicles, has gained about 58% so far in 2019 on sustained supply crunch. “Supply concerns have kept the metal buoyant, and underlying demand appears to be in good shape still on pullbacks,” MKS PAMP said in a note.

“We look set for an imminent test above $2,000, but we feel there will be some good supply above there from the spec community [speculators].”

Silver rose 0.1% to $17.05/oz, while platinum was unchanged at $929.46. 

Reuters