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PRECIOUS-Gold sheds 1% as risk appetite recovers

Published 20/08/2019, 04:06 am
© Reuters.  PRECIOUS-Gold sheds 1% as risk appetite recovers
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* Investors await Fed symposium later this week

* Speculators cut net longs in COMEX gold

* Silver falls 1% to trade below $17 (Updates prices)

By Sumita Layek

Aug 19 (Reuters) - Gold prices fell more than 1% on Monday as concerns eased that major economies could tip into recession, boosting investors' affinity for risk and detracting from bullion's safe-haven allure.

Spot gold XAU= was down 1% at $1,498.90 per ounce as of 1:47 p.m. EDT (1747 GMT). U.S. gold futures GCcv1 settled down 0.8% at $1,511.60.

"There has been some pullback in terms of the concerns over the risk of a recession. Perhaps the market's reaction to events in the past week have been too much, so there has been some positive retracement of equity markets and downward pressure on gold," said Jeff Klearman, portfolio manager at GraniteShares.

However, "fundamentally things have not really altered at this point; the underlying factors still support gold, which are accommodative central banks around the world, fears of slower global growth and U.S.-China trade tensions."

Benchmark U.S. Treasury yields rose on Monday, easing concerns of a recession, after the U.S. yield curve between two- and 10-year bonds inverted for the first time since 2007 on Wednesday, flashing warning signals for the economy. US/

Wall Street rose after China's plans for interest rate reform reinforced hopes that major economies would act to counter the impact of escalating global trade tensions. MKTS/GLOB .N

Over the weekend, U.S. President Donald Trump and top White House officials dismissed concerns that economic growth may be faltering, saying they saw little risk of recession. Trump also said he was "not ready to make a (trade) deal yet" with China. are now focused on the U.S. Federal Reserve's Jackson Hole symposium this week for greater clarity on the future path of interest rates. FEDWATCH

"We would expect that (Fed Chairman Jerome Powell) will be looking to reflect again on the state of the international economy and probably pave the way for a 25-basis point cut in the Fed funds target rate," INTL FCStone analyst Rhona O'Connell said in a research note.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , have increased by about 15 tonnes so far this month, and stood at 843.41 tonnes on Friday. GOL/ETF

Speculators trimmed their bullish stance in COMEX gold and cut net long positions in silver contracts in the week to Aug. 13, a report showed on Friday. CFTC/

Elsewhere, silver XAG= dipped 1% to $16.91 per ounce. Platinum XPT= rose 1% to $852.61 an ounce, while palladium XPD= gained 2.2% to $1,479.86.

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