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PRECIOUS-Gold gains as investors doubt impact of U.S.-China Phase 1 deal

Published 15/01/2020, 07:45 pm
© Reuters.  PRECIOUS-Gold gains as investors doubt impact of U.S.-China Phase 1 deal
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(Updates prices)

* Palladium hits record high of $2,219.51

* Asian stocks slip

* Federal Reserve's Beige Book due at 1900 GMT

By Sumita Layek

Jan 15 (Reuters) - Gold rose on Wednesday as investors sought safer assets amid uncertainty about the effectiveness of a Sino-U.S. Phase 1 trade deal after a top U.S. official said tariffs on Chinese goods would stay in place.

Spot gold XAU= rose 0.4% to $1,552.37 per ounce by 0829 GMT. U.S. gold futures GCcv1 gained 0.5% to $1,552.90.

Just a day before the world's top two economies prepared to sign an interim trade deal, U.S. Treasury Secretary Steven Mnuchin said tariffs on Chinese goods will be in place until the completion of a Phase 2 agreement. the tariffs could reduce the economic benefits of the Phase 1 deal by limiting China's access to one of its largest trading markets.

"Overnight reports that the U.S. would keep existing tariffs in place at least until after the U.S. election ... has obviously rattled markets and that has been somewhat supportive for gold," said ING analyst Warren Patterson.

"I struggle to see gold trading below $1,500 for a sustainable period of time, over the next year or so, largely as a result of this trade uncertainty."

Gold rose 18% last year mainly because of the 18-month long tariff dispute and its impact on the global economy.

Asian stocks slipped as Mnuchin's comments dented risk sentiment. MKTS/GLOB

Investors were keenly awaiting the details of the Phase 1 agreement, which would be released later in the day. importance of the Phase 1 deal has now diminished," said Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai. "It's just symbolic at this time, it will not have any significant impact on the market."

A source on Tuesday said that under the deal China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years, though some U.S. trade experts call it an unrealistic target. of friction in U.S.-China ties also remained with the U.S. nearing publication of a rule that would block shipments of foreign-made goods to China's Huawei. Federal Reserve's Beige Book, a summary of commentary on economic conditions, was due at 1900 GMT.

Palladium XPD= hit a record high of $2,219.51 an ounce earlier in the session on concerns of a supply deficit, and was last up 0.9% to $2,213.54.

"The underlying fundamentals with tight supply and demand balance is the key factor which continues to be supportive for prices," ING's Patterson said.

Silver XAG= rose 0.3% to $17.84 per ounce, while platinum XPT= advanced 1% to $992.65.

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