December 16, 2019

Gold eases as interim U.S. and China deal lifts risk appetite

(Reuters) - Gold prices edged lower on Monday after the United States and China agreed to a "phase one" trade deal that drove investors towards riskier assets, although a weaker dollar limited some of bullion's losses.  

    Spot gold was down 0.1% at $1,474.46 per ounce, as of 0353 GMT. U.S. gold futures were down 0.2% at $1,478.80.

    Asian shares rose as the world's top two economies announced a "phase one" trade agreement and suspended some tariffs on each other's goods that were due to go into effect on Sunday.

    "Investors are turning increasingly 'risk-on' after the phase one agreement, so that is likely to weigh on gold prices," Phillip Futures analyst Benjamin Lu said, adding that the dollar's weakness is, however, providing some underlying support to bullion.

    The dollar index was down against a basket of rivals, making gold cheaper for holders of other currencies.       

    U.S. Trade Representative Robert Lighthizer on Sunday said U.S. exports to China will nearly double over the next two years, although officials are yet to decide a date to sign the agreement.            

    "The phase one deal fell short of market expectations and is probably not enough to fully restore business confidence or generate a meaningful recovery in exports or investment," AxiTrader market strategist Stephen Innes said in a note.

    "Traders have now turned focus to the long and arduous road to a phase two trade deal. So gold could do well on escalating trade tensions."

    Gold prices have risen nearly 15% this year on the backdrop of the months-long tariff war and its impact on the global economy.      

    "Gold prices are not going to slide as the global growth is not super positive, there are still some risks," Phillip Futures' Lu said. "Gold will range between $1,400-$1,450 an ounce."

    Data from U.S. showed on Friday retail sales increased less than expected in November as Americans cut back on discretionary spending despite a strong labour market.            

    Hedge funds and money managers slashed their bullish positions in COMEX gold contracts in the week to Dec. 10, data showed.       

    Elsewhere, palladium rose 0.6% to $1,941.53 an ounce.

The autocatalyst metal had climbed to a record high of $1,979.95 in the previous session on supply concerns.

    Silver gained 0.1% to $16.94 per ounce, while platinum rose 0.2% to $930.12.