Gold gains as souring U.S.-China relations dent risk appetite

Spot gold was up 0.3pc at $1,476.50 an ounce by 1015 GMT and U.S. gold futures rose 0.2pc to $1,477. China con
20 Nov, 2019
  • Spot gold was up 0.3pc at $1,476.50 an ounce by 1015 GMT and U.S. gold futures rose 0.2pc to $1,477.
  • China condemned the move and called for Washington to stop meddling in its internal affairs.
  • European stocks steered away from a recent peak and U.S. 10-year bond yields slipped to their lowest in nearly three weeks.

Spot gold was up 0.3pc at $1,476.50 an ounce by 1015 GMT and U.S. gold futures rose 0.2pc to $1,477.

"The U.S. senate passing the Hong Kong democracy bill is raising further risk of a trade deal running into problems and it's causing some renewed risk-off in the markets," said Saxo Bank commodity strategist Ole Hansen.

"We see stocks trading weaker, bond yields moving lower and gold is ticking higher."

The U.S. Senate passed two bills backing human rights in Hong Kong and banning export of certain munitions to the region's police forces.

China condemned the move and called for Washington to stop meddling in its internal affairs.

European stocks steered away from a recent peak and U.S. 10-year bond yields slipped to their lowest in nearly three weeks, also pressured by U.S. President Donald Trump's threat to raise tariffs on Chinese imports if a trade deal cannot be reached with Beijing.

Investor eyes will also be on minutes from the U.S. Federal Reserve's October policy meeting, due at 1900 GMT, for additional cues on the monetary policy outlook.

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

"The market is pricing in one cut over the next 12 months and that will change very quickly on failure to reach a (trade) deal," Saxo Bank's Hansen added.

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

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

Elsewhere, silver was flat at $17.14, platinum was down 0.1pc at $909.14 and palladium was little changed at $1,764.50.

Palladium prices could continue to firm on supply issues, and $2,000 an ounce is a likely scenario for the autocatalyst metal next year, said Ross Norman, a London-based independent analyst.

The metal hit a record high of $1,824.50 on Oct. 30, buoyed by a sustained supply deficit.

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