Gold treads water amid concern about trade talks

Bengaluru — Gold prices were little changed on Wednesday after US President Donald Trump dashed investors’ hopes for a positive sign on a US-China trade deal with a speech that gave away little, while a firmer dollar limited upside for bullion.

Spot gold was trading at $1,458.59/oz by 3.56am GMT, while US gold futures rose 0.4% to $1,459.10/oz.

US and Chinese negotiators were “close” to a “phase one” trade deal, Trump said in Tuesday’s speech to the Economic Club of New York, but offered no new details on negotiations.

“The downtrend (in gold) has paused. President Trump, on one hand, said the deal was closing and, on the other hand, said he will raise the tariffs if a deal is not reached,” said Michael McCarthy, chief market strategist at CMC Markets.

“This didn’t help the trade situation but supported gold.”

He said the narrow trading range in gold reflected uncertainty, leading traders to start wondering whether a promised “phase one” agreement would be achieved.

Limiting gold’s upside, the dollar clung to most of its recent gains and was hovering near a month high, making bullion expensive for holders of other currencies.

Asian stocks and Wall Street futures fell on growing worries that US-China trade talks are stalling after Trump failed to deliver any new information.

Gold, considered a safe store of value during economic and political uncertainty, has risen about 13% in 2019 on concerns over the trade war and monetary policy easing by central banks.

Later in the day, Fed chair Jerome Powell is set to testify on the economic outlook before the congressional Joint Economic Committee.

Political unrest in the Asian financial hub of Hong Kong provided support for the precious metal, as police battled pro-democracy protesters at several university campuses in the Chinese-governed city.

“Slowing economic growth, geopolitical risk and an easing interest rate cycle remain the reality,” ANZ Bank said in a note. “And such a backdrop should support gold investment demand through 2020.”

Reflecting sentiment, holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust fell to their lowest since September 20 on Tuesday.

Palladium was up 0.1% at $1,701.15/oz.

“Palladium should hold its premium over other metals, amid a sustained deficit backdrop,” ANZ said. “Stricter emission regulations are driving palladium demand, despite the struggling auto sector.”

Silver rose 0.5% to $16.85/oz, and platinum gained 0.2% to $870.26. 

Reuters