Gold eases as trade deal hopes stir risk sentiment

Gold prices edged down to a one-week low on Monday after the United States and China expressed willingness to sign an initial trade deal by the year-end, lifting demand for riskier assets and boosting the dollar.

Spot gold was down 0.1 percent to $1,460.85 per ounce by 0547 GMT, having fallen to its lowest since Nov. 18 earlier in the session. US gold futures were down 0.2 percent to $1,460.80.

“Trade optimism is sending global equities higher and capital is fleeing away from safe havens into risk assets,” said Margaret Yang Yan, a market analyst at CMC Markets.

Upbeat headlines about trade talks between Washington and China helped Asian shares regain footing, while the dollar rose against a basket of rivals, making the non-yielding bullion expensive for holders of other currencies.

The US currency rebounded strongly on Friday after a survey showed the US manufacturing output accelerated in November and services activity picked up more than expected. “US economic data has shown signs of stabilisation recently ... also consensus is that the global slowdown is going to bottom in the first quarter of next year and then start to rebound,” Yan said.

Gold, considered a safe asset in times of political and economic uncertainty, has gained over 13 percent this year, mainly due to the long drawn-out tariff dispute and concerns over slowing global growth.

Limiting bullion’s downside, investors were still cautious with US and Beijing officials saying an ambitious “phase two” trade deal looked less likely. “The market is in an extended period of consolidation at the bottom of the recent range, waiting for the next major catalyst to emerge,” AxiTrader market strategist Stephen Innes said in a note.

“US economic data will likely factor a lot into gold traders’ decision making into year-end as will the ebb and flow of trade talks. But ultimately, it’s all about the (US Federal Reserve) Fed policy, US interest rates and the dollar.”

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

Speculators increased their bullish positions in COMEX gold and silver contracts in the week to Nov. 19, data showed.

Spot gold may test a support at $1,455 per ounce, a break below which could cause a fall to $1,440, according to Reuters technical analyst Wang Tao.

Elsewhere, silver was down 0.3 percent to $16.95 per ounce, after touching its lowest in a week.

Palladium rose 0.7 percent to $1,787.36 per ounce, having earlier hit its highest since Nov.8, and platinum gained 0.5 percent to $895.39.