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PRECIOUS-Gold dips, but near 6-year high on rate cut hopes, trade fears

Published 28/08/2019, 05:36 pm
© Reuters. PRECIOUS-Gold dips, but near 6-year high on rate cut hopes, trade fears
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* Silver hits highest level since April 2017

* Platinum scales near one-month high

* GRAPHIC-Gold in various currencies: http://tmsnrt.rs/1JxbO6Y

(Updates prices)

By K. Sathya Narayanan

Aug 28 (Reuters) - Gold eased on Wednesday, after rising over 1% in the previous session on fears of a possible recession, but held close to a more than six-year high on hopes of a rate cut by the U.S. central bank and uncertainties around the Sino-U.S. trade talks.

Spot gold XAU= was down 0.1% at $1,540.40 per ounce, as of 0724 GMT. On Monday it touched $1,554.56, its highest in over six-years.

U.S. gold futures GCv1 were down 0.1% at $1,550.50 an ounce.

"It is more of a corrective move. We saw prices close above the resistance at $1,535 over the past 24 hours... So, gold is retesting the $1,535 level which is common when you break a technical level," said Ilya Spivak, senior currency strategist with DailyFx.

Adding some pressure on bullion was a firm dollar .DXY , while Asian equities posted modest gains. USD/ MKTS/GLOB

Gold rose more than 1% in the previous session as an inversion in the U.S. yield curve and disappointing U.S. economic data rekindled fears of a looming recession amid uncertainties in the U.S.-China trade dispute. US/ yield curve inversion deepened to levels not seen since 2007.

"People are beginning to think that the economy is not doing that well, there could be a possible recession, or more likely, a slowing economy, which means the Federal Reserve will have to cut rates and that supports gold," said John Sharma, an economist with National Australia Bank.

Federal funds futures FEDWATCH implied traders saw a 91% chance of a 25 basis-point rate cut by the U.S. central bank next month.

Sharma also said that as long as the Sino-U.S. trade issue continues, gold will be well supported.

U.S. President Donald Trump on Monday predicted a trade deal with China but optimism wilted after China's foreign ministry spokesperson dismissed claims that there had been phone calls between the two sides. "if there are some sort of tangible signs that the (U.S.-China trade) talks are going to restart, or at least that they are getting there: it would be a risk-on outcome and we can see yields go higher and push gold a bit lower," DailyFx's Spivak said.

Elsewhere, spot silver XAG= gained 0.7% to $18.28 an ounce, having earlier touched $18.34, its highest level since April 2017.

Platinum XPT= climbed 0.5% to $869.70 an ounce, after touching its highest in nearly a month earlier in the session, while palladium XPD= eased 0.2% to $1,478.45.

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