Weak Chinese data supports gold

Gold prices held above $1,490/oz on Friday as disappointing data from China reinforced concerns that its trade spat with the US had begun taking a toll on global economies, while the Brexit deal waits for parliamentary backing.

However, capping gains was upbeat equities that cheered the heightened possibility that Britain could have a smooth departure from the EU after all.

Spot gold rose 0.1% to $1,492.56/oz as of 3.42am GMT. Prices had gained about 0.2% in the week.

US gold futures dropped 0.1% to $1,496.20/oz.

The EU backed a new Brexit deal with Britain on Thursday. This prompted an uptick in Asian shares with MSCI’s broadest index of Asia-Pacific shares ex-Japan up 0.1%.

“The Brexit deal did not have as much a negative impact on gold as expected. This means that there are still concerns that it might not get passed in the parliament,” said Brian Lan, MD at dealer GoldSilver Central in Singapore.

While markets cheered progress in talks, doubts erupt if Prime Minister Boris Johnson will be able to secure the UK parliament’s backing for the agreement if he is to take Britain out of Europe on October 31.

“Gold will be rangebound until and unless we have some clarity on Brexit and other geopolitical risks,” Lan said, adding that he expects gold to trade around $1,475/oz and $1,503/oz in the short term.

Worries surrounding a trade war between the US and China still lingered, with China’s economic growth slowing more than expected to 6% year on year in the third quarter, the weakest pace in almost three decades.

Beijing hopes to reach a phased agreement and cancel tariffs as soon as possible, the commerce ministry said on Thursday, adding that trade wars had no winners.

The world’s two-largest economies have imposed tariffs on each other’s goods in a dispute over China’s trade and industrial policies that has slammed the brakes on global economic growth. Gold is often used at such times as a hedge against uncertainty.

The dollar index, at a near eight-week low, has also lent support to the metal.

ANZ Bank said in a note it expects gold to receive support from elevated macro and geopolitical risks, with undersupplied PGM (platinum group metal) prices likely to push higher.

“The palladium market is still structurally tight, keeping prices resilient with intermittent volatility.”

Among other precious metals, palladium was muted at around $1,758.91/oz, a day after hitting a record high of $1,783.21/oz. The autocatalyst metal was up 3.6% for the week, and set for its best level since the week of September 13.

Platinum shed 0.2% to $885.57/oz while silver inched 0.1% higher to $17.54/oz.

Reuters