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US-China tensions spur gains in gold

US gold futures was little changed at $1,474.80 per ounce.

Reuters|
Updated: Nov 20, 2019, 12.02 PM IST
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US gold futures were unchanged at $1,474.90 per ounce.

Commodity Summary
MCX

SILVER
Gold inched up on Wednesday as trade and political tensions ratcheted up between United States and China, stoking demand for the risk-averse precious metal.

Spot gold rose 0.2 per cent to $1,475.51 per ounce by 0538 GMT. US gold futures were unchanged at $1,474.90 per ounce.

US President Donald Trump on Tuesday threatened to raise tariffs on Chinese imports if no deal is reached with Beijing and as the US Senate passed a bill backing human rights in Hong Kong.

The Senate also passed a second legislation to ban export of certain munitions to Hong Kong police forces. China condemned the moves and summoned an US embassy official to demand that the US stop its meddling.

"There are concerns that the latest bill passed in the US in support of the Hong Kong protesters might derail the progress in the US-China trade deal," Ilya Spivak, a senior currency strategist at DailyFx said.

However, gains in gold are limited as investors are "not quite prepared to take a firm bet ahead of the US Federal Reserve's minutes, which will probably confirm that the Fed is on hold for now and that's not good news for gold," Spivak added.

Investors are awaiting minutes from the Fed's October policy meeting, due at 1900 GMT, for further cues on the monetary policy outlook.

The US central bank cut interest rates thrice this year to help sustain US growth, but had signalled last month that there would be no further cuts unless the economy takes a turn for the worse.

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

Asian shares moved lower on conflicting messages on the trade front, in contrast to the strong rallies seen recently in global equities markets.

"The precious metal, though facing bearish pressures over a strong rally in the equities market, will remain vigorous over subdued global growth and geopolitical uncertainties in Q4," Phillip Futures analyst Benjamin Lu said in a note.

In Hong Kong, the last band of anti-government protesters trapped inside a besieged Hong Kong university were weighing a narrowing range of options as police outside appeared ready to simply wait them out.

Spot gold may rise into a range of $1,480-$1,485 per ounce, according to Reuters technical analyst Wang Tao.

Elsewhere, silver rose 0.2 per cent to $17.17 per ounce, while palladium was flat at $1,762.84 per ounce.

Platinum was little changed at $910.21 per ounce.


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