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Gold Subdued As Equities Jump On Trade Hopes; Focus On Fed

Spot gold eased 0.1 per cent to $1,491.72 per ounce as of 0537 GMT, after shedding nearly 1 per cent in the previous session.

Photo Credit : Reuters


Gold prices were little changed on Tuesday, hovering around the key $1,490 an ounce level as progress in China-U.S. trade talks sent equities soaring, while anticipation ahead of major central bank meetings in the week provided some support.

Spot gold eased 0.1% to $1,491.72 per ounce as of 0537 GMT, after shedding nearly 1% in the previous session. U.S. gold futures dropped 0.1% to $1,494 an ounce.

U.S. President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule.

Further more, the United States Trade Representative, the lead U.S. trade agency, said there could be an extension on tariff suspensions on $34 billion of Chinese goods set to expire on Dec. 28 this year.

Wall Street jumped to an all-time peak after the statements on Monday, while Asian shares scaled a three-month high in early trade on Tuesday.

"There is a broad risk-on sentiment, with U.S. equities hitting a fresh record high. The trade talks are highly unpredictable... It has disappointed investors many times in the past and may repeat again," said Margaret Yang Yan, a market analyst at CMC Markets.

"The market is very positive about it right now, but that also means it is very vulnerable."

Gold was far from losing its sheen, analysts said, as a dearth of clarity on trade talks and Britain's divorce from the European Union (EU) still loomed large.

The EU agreed to a Brexit delay of up to three months, but Brexit hangs in the balance, with British politicians still arguing over how, when or even whether the divorce should take place at all.

Investors also braced for another dose of policy stimulus from the U.S. Federal Reserve this week, where it is expected to cut rates for a third time in a row when it concludes its two-day meeting on Wednesday.

Central banks in Japan and Canada are also scheduled for policy meetings this week, with the former leaning toward keeping monetary policy steady.

Lower interest rates make gold attractive as it reduces the opportunity cost of holding the metal.

Among other precious metals, palladium dropped 0.1% to $1,798.18 an ounce, not far from a record high of $1,808.81 hit in the previous session, as supply concerns continue boosting the autocatalyst metal's appeal.

Silver fell 0.4% to $17.79 per ounce and platinum shed 0.6% to $913.26 an ounce.


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