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Gold slips as trade optimism lifts risk assets; ECB meet in focus

Thu Sep 12 2019



Gold prices dipped on Thursday as hopes for a thaw in the U.S.-China trade tensions lifted risk appetite, while some investors booked profits ahead of a meeting by the European Central Bank.

Spot gold was down 0.1% at $1,495.30 per ounce, as of 0528 GMT. U.S. gold futures were little changed at $1,503.70.


The United States on Wednesday agreed to delay increasing tariffs on $250 billion worth of Chinese imports to Oct. 15 from Oct. 1 “as a gesture of good will”.


U.S. President Donald Trump postponing additional tariffs on Chinese goods eased trade tensions to an extent, said Brian Lan, managing director at dealer GoldSilver Central in Singapore, adding markets will now be awaiting cues from the ECB meeting.


Hopes of a breakthrough in negotiations between the world’s two biggest economies lifted risk sentiment, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.2%, and the dollar at a six-week high against the safe-haven yen.


The ECB meeting later in the session will be closely watched for clues on what measures the bank was willing to take to support a dampened economy amid Brexit concerns. The U.S. Federal Reserve is expected to do the same next week.


“There seems to be no concrete plans yet (from the ECB). So investors are waiting and some of them are already starting to take profits. That’s why we don’t see (gold) prices fall much further,” Lan added.


The ECB is set to announces its rate decision at 1145 GMT on Thursday, followed by ECB President Mario Draghi’s news conference at 1230 GMT.


Gold prices have dropped about 4% from a more than six-year high of $1,557 it hit on Sept. 4 as renewed risk appetite and improved economic data dampened demand for the safe-haven metal. These prices are highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.


Gold prices continue to hover near $1,500 an ounce. “It implies that there is still plenty of demand for the safe-haven asset on this dip in prices, which contrasts with the bullish euphoria elsewhere,” OANDA analyst Jeffrey Halley wrote in a note.


Signals are mixed for spot gold, as it is stuck in a neutral range of $1,480-$1,497 per ounce, said Reuters technical analyst Wang Tao.


Among other precious metals, silver inched higher to $18.10 per ounce, while platinum rose 0.4% to $948.21. Meanwhile, palladium gained half a percent to $1,580.19 an ounce.


Palladium was on track for a fourth straight session of gains, while holding close to a two-month high of $1,590 it touched on Wednesday.


Source: Reuters