Gold rises as worries about the US-China trade deal rise too

Bengaluru — Gold prices on Wednesday rose from a more-than one-week low hit in the last session on renewed worries about the US-China trade relations ahead of the signing of an initial deal.

Just a day before the signing an interim trade deal, US treasury secretary Steven Mnuchin said on Tuesday that tariffs on Chinese goods will be in place until the completion of a second phase agreement.

Spot gold rose 0.3% to $1,551.40 an ounce as of 11.01am GMT, having slipped to a more-than one-week low of $1,535.63 in the previous session. US gold futures gained 0.5% to $1,552.20.

“The market is uncertain regarding the deal between US and China, while somewhat weaker equity markets and weaker dollar are [also] supporting the prices,” Commerzbank analyst Eugen Weinberg said. “The tariffs are not to be reduced any further until the US election cycle is over in November and that doesn’t help in bringing in the confidence into the market.”

World stocks eased off record highs, while US and German bond yields slipped as euphoria over a China-US trade deal declined. Keeping the tariffs could reduce the economic benefits of the phase one deal by limiting China’s access to one of its largest trading markets.

“Phase one is going to be signed in the next few hours, but investors were expecting more from this part of the agreement,” Carlo Alberto De Casa, chief analyst at ActivTrades said in a note. “The hypothetical phase two will take time and there is now no certainty on this. For this reason, it’s very little surprise to see gold in green, recovering to the threshold of $1,550.”

Also on investors’ radar was the US Federal Reserve’s beige book, a summary of commentary on economic conditions, due at 7pm GMT.

In other metals, marked by prolonged supply deficit in the market, automotive catalyst palladium notched a record high of $2,219.51 an ounce earlier in the session, and was last up 0.8% at $2,211.33. “We don’t believe that the all-time high level [for palladium] will be a deterrent for fresh buying!” MKS traders wrote in a note. “The risk on the downside lies with some speculative profit taking, but any correction should be met with aggressive buying and remain short-lived. We expect palladium to remain in the spotlight again this year.”

Silver advanced 0.1% to $17.81 an ounce, while platinum rose 1.3% to $996.37, having risen to a near two-year high of $1,006.17 an ounce.