Gold treads water as trade caution stymies safe-haven demand

Gold was little changed on Thursday as investors maintained a cautious stance amid signs of a delay in Washington and Beijing signing a long-awaited interim trade deal.

Spot gold was trading at $1,491.27 per ounce, as of 0337 GMT, while U.S. gold futures were flat at $1,492.9 per ounce.

A senior official of the Trump administration told Reuters on Wednesday a meeting between U.S. and Chinese leaders to sign an interim trade deal could be delayed until December as discussions continue over terms and venue.

“It (delay in U.S.-China trade deal) has added a bit of caution. Trade talks are going to go ahead and at the same time, the complicated issues in the deal have not yet been discussed, so the investors are in wait-and-see-mode,” said John Sharma, an economist with National Australia Bank.

“At the moment, there is not much to change it (gold’s direction), we will have to wait for some external factors, either geopolitical or economic to push it out of the range.”

A tit-for-tat tariff war between the world’s two biggest economies for the past 16 months have roiled financial markets and raised fears of a global economic slowdown, helping the safe-haven bullion to rise more than 16 percent this year.

The dollar index, which has eased about 1.5 percent against a basket of rival currencies so far this week, made gold cheaper for investors holding other currencies, while Asian shares paused near multi-month peaks.

“Sentiments are that some kind of deal will get done, also the Federal Reserve have said that they are not looking to do anything more this year (with interest rates), that is why gold is not reacting much,” Brian Lan of Singapore dealer GoldSilver Central said.

Last month, the Fed cut interest rates for the third time this year to help sustain U.S. growth despite a slowdown in other parts of the world, but signaled there would be no further reductions unless the economy takes a turn for the worse.

Lower interest rates reduce the opportunity cost for holding the non-yielding gold.

Gold will trade in a range of $1,482-$1,518 an ounce in the short term, Lan said.

Meanwhile, the International Monetary Fund on Wednesday slashed euro zone growth forecasts.

Elsewhere, silver rose 0.1 percent to $17.63 per ounce. Platinum was unchanged at $929.35 per ounce and palladium dipped 0.2 percent to $1,788.86 per ounce.

Source: Reuters