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PRECIOUS-Gold dips as dollar holds strong ahead of Sino-U.S. trade talks

Published 08/10/2019, 05:45 pm
© Reuters.  PRECIOUS-Gold dips as dollar holds strong ahead of Sino-U.S. trade talks
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* Gold set for third straight decline

* Sino-U.S. trade talks to take place on Oct 10-11 (Adds technicals; updates prices)

By Karthika Suresh Namboothiri

Oct 8 (Reuters) - Gold prices slipped to a near one-week low on Tuesday, declining for a third straight session, weighed down by a firmer dollar ahead of the upcoming trade talks between China and the United States.

Spot gold XAU= was down 0.3% at $1,489.32 per ounce, as of 0627 GMT. Prices had dropped 1% in the previous session.

U.S. gold futures GCcv1 fell 0.6% to $1,494.60 per ounce.

"One of the key factors to the gold market is the outlook for global growth, and with trade developments between U.S. and China, traders are on alert," said Michael McCarthy, chief market strategist at CMC Markets.

Top-level trade talks are scheduled to resume on Thursday, when Chinese Vice Premier Liu He meets with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

"The market is very vulnerable to headlines. Any further news on discussions in the U.S. with negotiators in China could be very important," McCarthy said.

Asian shares inched up in early trade, though caution prevailed as expectations of a trade deal dimmed after Washington blacklisted Chinese companies over Beijing's treatment of predominantly Muslim ethnic minorities and President Donald Trump said a quick trade deal was unlikely. uncertainty regarding the outcome of trade talks had pushed the dollar index .DXY higher overnight. A stronger U.S. currency makes dollar-denominated gold more expensive for holders of other currencies, which could subdue demand.

The talks are to proceed ahead of a scheduled increase in U.S. tariffs on $250 billion worth of Chinese goods to 30% from 25% on Oct. 15. Trump has said the tariff increase will take effect if no progress is made in the negotiations.

Data from China on Tuesday did little to cheer markets after the services sector grew at its slowest pace in seven months in September, despite a strong increase in new orders. the moment we are fairly in a trading range. There is support between $1,480 and $1,490, and resistance around $1,525 to $1,530," McCarthy added.

Investors now await the U.S. Federal Open Market Committee's minutes from its September meeting, due on Wednesday, for clues on whether the Fed will cut rates at its October meeting, in what could be its third interest rate cut for the year.

Spot gold may break a support at $1,488 per ounce and fall towards the range of $1,446-$1,462, Reuters technical analyst Wang Tao said. other precious metals, silver XAG= dropped 0.6% to $17.34 an ounce, while platinum XPT= and palladium XPD= rose 0.4% each to $880.25 and $1,665.93 respectively.

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