Gold remains firm as risk-on mood returns

Bengaluru — Gold prices were steady on Monday as the greenback eased on a soft manufacturing survey, while signs of a US-China trade deal coming through this month stoked risk appetite, capping gains for the safe-haven bullion.

Spot gold was steady at $1,512.93 per ounce, as of 4.54am, after dipping 0.2% earlier in the session, while US gold futures were up 0.2% at $1,514.80 per ounce.

The US and China said on Friday they made progress in talks aimed at defusing a nearly 16-month-long trade war that has harmed the global economy, and US officials said a deal could be signed this month.

Markets took further optimism from economic data last week that eased apprehensions of a slowdown fuelled by the long-drawn trade war between the world’s two largest economies.

In the latest addition, US job growth slowed less than expected in October, while hiring in the prior two months was stronger than previously estimated, data from the Labour Department showed.

“In the short term, market sentiment is too good for investors to pay attention to gold,” said Margaret Yang Yan, a market analyst at CMC Markets, adding that a weaker dollar is limiting losses in the yellow metal.

Three-month low

The dollar had tried to rally on Friday after US payrolls beat expectations, but it was undone by a soft manufacturing survey that left it looking heavy.

Against a basket of currencies, the dollar was stuck at 97.218 having touched a three-month low at 97.107 on Friday. It was now targeting the August trough of 97.033.

“But in the mid- to long-term, there is still upside for gold as the US Fed is expected to reduce rates next year to strengthen the economy and boost market confidence, ahead of the US elections,” Yan added.

Last week, the Fed cut interest rates for a third time this year, but signalled there would be no further reductions unless the economy takes a turn for the worse.

Asian shares rose to 14-week highs on Monday, as growing optimism over US-China trade talks and upbeat US job data boosted global investors’ appetite for riskier assets.

Spot gold may test a resistance at $1,519 per ounce, a break above which could lead to a gain to $1,534.

In Europe, the new head of the European Central Bank (ECB), Christine Lagarde, will be giving her first speech in the role later in the day and markets expect she will stick to easy policy script left by her predecessor, Mario Draghi.

Among other metals, silver rose 0.2% to $18.12 per ounce, platinum was up 0.7% at $952.59 per ounce, while palladium inched up 0.3% to $1,811.23.

Reuters