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PRECIOUS-Gold firms as trade deadline nears; investors await Fed verdict

Published 11/12/2019, 12:49 am
© Reuters.  PRECIOUS-Gold firms as trade deadline nears; investors await Fed verdict
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(Adds detail, quotes, updates prices)

* Fed largely expected to keep rates unchanged

* Palladium nears $1,900/oz

* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl

By Karthika Suresh Namboothiri

Dec 10 (Reuters) - Gold rose on Tuesday on uncertainty over U.S.-China trade talks ahead of a Dec. 15 tariff deadline while investors looked to the U.S. Federal Reserve's policy meeting for cues on its 2020 monetary outlook.

Spot gold XAU= rose 0.4% to $1,467.00 an ounce at 1323 GMT while U.S. gold futures GCcv1 gained 0.5% to $1,471.50.

"Gold is riding higher on dollar weakness and caution ahead of a looming tariff deadline," said FXTM analyst Lukman Otunuga.

If Washington proceeds with the earmarked tariffs, risk aversion is likely to engulf financial markets until the end of the year, boosting gold, he added.

U.S. Agriculture Secretary Sonny Perdue said that U.S. President Donald Trump does not want to implement the next round of scheduled tariffs against Chinese goods on Dec. 15 but wants "movement" from China to avoid them. MKTS/GLOB

The protracted trade war between the world's two largest economies has fanned recessionary fears, putting safe-haven gold on track for its best year since 2010.

A weaker dollar against versus major currencies also offered support for bullion. .DXY USD/

"Gold has defended the $1,450/oz level despite a U.S.-China trade deal appearing increasingly likely and unexpectedly strong U.S. jobs data," UBS analysts said in a note.

"In the short-term, if the Fed shifts to a more hawkish assessment, gold is at risk from further repositioning. Technically this could pull prices back to $1,410/oz."

The Fed is expected to keep rates unchanged at its two-day meeting ending on Wednesday, with investors awaiting policymakers' forecasts for U.S. economic growth. FEDWATCH

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

Markets are also focused on the British election on Thursday after the country's economy grew at its slowest annual pace in nearly seven years in October. European Central Bank is expected to keep interest rates steady at its meeting this week. ECBWATCH

Elsewhere, palladium XPD= gained 0.4% to $1,888.68 an ounce, having soared to yet another record high of $1,898.50 in the previous session, just shy of the psychologically significant $1,900 level.

Concerns that supply of the autocatalyst metal might not meet soaring demand has lifted prices nearly 50% this year.

Silver XAG= gained 0.4% to $16.66 and platinum XPT= was up 1.6% at $908.64.

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