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Gold holds steady as US-China trade-talk optimism ebbs

Tue Oct 15 2019



Gold prices held steady on Tuesday as optimism surrounding US-China trade negotiations faded, while investors awaited outcome of crucial discussions that will determine how Britain will depart from the European Union.

Spot gold was unchanged at $1,492.32 per ounce as of 0613 GMT. US gold futures slipped 0.1 per cent to $1,496.40 per ounce.


"Markets enjoyed a good risk-on rally, but on Monday news saying that China required more negotiation and talks before they find any deal, which is very disappointing," said Margaret Yang Yan, a market analyst at CMC Markets.

"Gold is in a consolidation phase, momentum is weak for a good rebound. The market is making lower highs and lower lows."


A Bloomberg report on Monday, citing sources, said China wants more talks as soon as the end of October to hammer out the details of Trump's phase 1 deal before Chinese President Xi Jinping agrees to sign it.


Sombre data from China reinforced the case for Beijing to unveil further stimulus as manufacturing cools on weak demand and US trade pressures. China's factory gate prices declined at the fastest pace in more than three years in September.


Late on Friday, the United States outlined the first phase of a trade deal and suspended this week's scheduled tariff hikes on Chinese goods, but existing tariffs remained in place and officials on both sides said much more work was needed before an accord could be agreed.


Limiting gold's gains, Asian stocks and Wall Street futures inched higher as some investors held out hope that Britain still had a chance to avoid a messy exit from the European Union at key negotiations this week.


Officials from Britain and the EU will meet at a make-or-break summit on Thursday and Friday that will determine whether or not Britain is headed for a so-called no-deal Brexit.


"The Brexit narrative seems to be playing as basic risk on/off catalyst, with echoes into bond yields driving near-term gold swings," said Ilya Spivak, a senior currency strategist at DailyFx.


"Gold may struggle to find lasting upside follow-through even if risk appetite cools into the year-end. The markets remain priced for a far more dovish Fed outlook than the central bank has signed up for."


Amongst other precious metals, palladium was subdued at $1,714.85 an ounce, after hitting a fresh record high of $1,720.97 in the previous session.


Silver dropped 0.1 per cent to $17.64 per ounce and platinum declined 0.4 per cent to $889.34.


Source: Reuters