December 10, 2019

Gold little changed ahead of Fed meeting, U.S. tariff deadline

(Reuters) - Gold was trading in a tight range on Tuesday ahead of a two-day rate-setting meeting by the U.S. central bank, with investors awaiting clarity on whether a next round of U.S. tariffs on Chinese goods will come into effect this weekend. 

    Spot gold was down 0.1% to $1,460.17 per ounce by 0350 GMT. U.S. gold futures was flat at $1,464.50.

    "Both the events could be potential catalysts for gold, prices could go down if Fed is more hawkish biased. However, in case the U.S. and China can't reach any resolution and tariffs kick in, traders will move back to the safe-haven gold," said Margaret Yang Yan, a market analyst at CMC Markets.

    Both the United States and China have adopted a reconciliatory tone, with China saying it hoped to make a deal as soon as possible. President Donald Trump has said he was working with Beijing on an agreement ahead of new tariffs on $156 billion worth of Chinese imports on Dec.15.                       

    "Given that we are tilting toward some sort of the deal being reached with the Chinese, we think both gold and silver will struggle going into year-end and see a lower trading range for both over the next few weeks," said Edward Meir at ED&F Man Capital Markets in a note.

    The impact of a prolonged trade war on economic growth has led the U.S. Federal Reserve to cut rates three times this year, sparking demand for the non-yielding bullion. Gold is now on track for its best year in almost a decade.

    Most Fed policymakers have stressed on keeping the interest rates steady unless the economic outlook deteriorates. The Fed is widely expected keep interest rates on hold in the range of 1.50% to 1.75%.          

    In other precious metals, palladium rose 0.1% to $1,884.31 an ounce. Prices had climbed to an all-time high of $1,898.50 in the previous session.

    The autocatalyst metal, used in vehicle exhausts to reduce harmful emissions, has risen more than 49% so far this year.

    "The rally so far this year has been driven by tight supply, reflected in a persistent back in the forward curve and elevated lease rates," Meir said.

    "We suspect that palladium has more room to run, with $2,000 looking to be the next logical resistance level."

    Silver fell 0.1% to $16.58 per ounce, while platinum gained 0.2% to $896.67.