Gold rises as Nafta-induced risk appetite fades

Bengaluru — Gold prices rose on Tuesday as risk appetite faded after getting a boost from an agreement between the US and Canada to salvage a North American free trade deal.

Asian stocks fell, with MSCI’s broadest index of Asia-Pacific shares outside Japan declining 1% after a steady start, as cautious views on the global economy curbed risk sentiment.

Spot gold was up 0.4% at $1,192.62 at 4.49am GMT, while US gold futures were 0.4% higher at $1,196.40 an ounce.

“Prices have hovered around $1,190/oz and there is some demand from speculators and physical buyers at this level,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Optimism surrounding a last-minute deal between the US and Canada on Sunday to salvage a trilateral pact with Mexico, increased the appetite for riskier assets on Monday.

“Gold was assisted by a largely stable dollar index (on Tuesday),” said National Australia Bank economist John Sharma said.

“Gold is likely to hover around $1,180-$1,210 an ounce in the near term. It will need a circuit breaker such as a sharp fall in equities or some other global event to break out of its range. Of course, thedollar is key here.”

The dollar index against a basket of six major currencies was flat on Tuesday.

Gold has fallen about 13% from its April high, largely because of the stronger dollar, which has been boosted by a vibrant US economy and fears of a global trade war.

“I don’t see the dollar doing much ahead of Friday’s nonfarm payrolls data. I look for that key print to drive the pace of the US Federal Reserve repricing rates higher, which I think will boost the dollar’s appeal,” said Stephen Innes, Asia-Pacific trading head at Oanda in Singapore.

Market participants will also be watching out for any additional cues on the pace of interest rate hikes from US Federal Reserve chairman Jerome Powell, who will speak on “The Outlook for Employment and Inflation” before the National Association for Business Economics later in the day.

The Fed raised rates last week and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.

Meanwhile, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.28% to 740.17 tonnes on Monday. It has fallen more than 4-million ounces since hitting a peak in late April.

Among other precious metals, silver rose 0.7% to $14.56 an ounce.

Palladium was up 0.4% at $1,060.60, while platinum rose 0.5% to $826 an ounce.