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PRECIOUS-Gold slips as trade deal optimism boosts riskier assets

Published 25/11/2019, 06:47 pm
© Reuters.  PRECIOUS-Gold slips as trade deal optimism boosts riskier assets
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* Speculators raise bullish bets on COMEX gold, silver

* Spot gold may test support at $1,455/oz- technicals

* Palladium hits over two-week high (Updates prices, adds comment and details)

By Sumita Layek

Nov 25 (Reuters) - Gold fell 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 XAU= eased 0.2% to $1,459.16 per ounce by 0728 GMT, having earlier fallen to its lowest since Nov. 18. U.S. gold futures GCcv1 fell 0.3% to $1,459.

"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 .DXY rose, making bullion expensive for holders of other currencies. MKTS/GLOB USD/

The U.S. currency rebounded strongly on Friday after a survey showed the U.S. manufacturing output accelerated in November and services activity picked up more than expected. 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% this year, mainly due to the tariff dispute and global economic concerns.

"Prices can fall below $1,400 if a 'phase 1' trade deal is signed. However, we can get a clear direction only after the first phase is completed," said Hareesh V, head of commodity research at Geojit Financial Services.

Investors were still cautious on trade talks with U.S. and Beijing officials saying an ambitious "phase two" trade deal looked less likely. 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 (U.S. Federal Reserve) Fed policy, U.S. interest rates and the dollar," AxiTrader market strategist Stephen Innes said in a note.

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. CFTC/

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. TECH/C

Elsewhere, silver XAG= dipped 0.6% to $16.90 per ounce, after touching its lowest in a week.

Palladium XPD= rose 0.7% to $1,787.93 per ounce, having earlier hit its highest since Nov.8, and platinum XPT= gained 0.3% to $893.62.

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