Gold gains ground on concerns over U.S.-China trade

London (Jan 15)  Gold prices on Wednesday rose from an over one-week low hit in the last session on renewed worries about the U.S.-China trade relations ahead of the signing of an initial deal. Just a day before the signing an interim trade deal, U.S. Treasury Secretary Steven Mnuchin on Tuesday said tariffs on Chinese goods will be in place until the completion of a Phase 2 agreement.

Spot gold rose 0.3% to $1,551.40 per ounce as of 1101 GMT, having slipped to a more than one week low of $1,535.63 in the previous session. U.S. gold futures gained 0.5% to $1,552.20. "The market is uncertain regarding the deal between U.S. and China, while somewhat weaker equity markets and weaker U.S. dollar are (also) supporting the prices," Commerzbank analyst Eugen Weinberg said.

"The tariffs are not to be reduced any further until the U.S. election cycle is over in November and that doesn't help in bringing in the confidence into the market." World stocks eased off record highs, while U.S. and German bond yields slipped as euphoria over a Sino-U.S. trade deal depleted. Keeping the tariffs could reduce the economic benefits of the Phase 1 deal by limiting China's access to one of its largest trading markets.

"Phase one is going to be signed in the next few hours, but investors were expecting more from this part of the agreement," Carlo Alberto De Casa, Chief analyst at ActivTrades said in a note. "The hypothetical Phase 2 will take time and there is now no certainty on this. For this reason, it's very little surprise to see gold in green, recovering to the threshold of $1,550."

Also on investors' radar was the Federal Reserve's Beige Book, a summary of commentary on economic conditions, due at 1900 GMT. Elsewhere, marked by prolonged supply deficit in the market, auto-catalyst palladium notched a record high of $2,219.51 an ounce earlier in the session, and was last up 0.8% at $2,211.33.

"We don't believe that the all-time high level (for palladium) will be a deterrent for fresh buying!" MKS traders wrote in a note. "The risk on the downside lies with some speculative profit taking, but any correction should be met with aggressive buying and remain short-lived.

We expect palladium to remain in the spotlight again this year." Silver advanced 0.1% to $17.81 per ounce, while platinum ros 1.3% to $996.37, having risen to a near 2-year high of $1,006.e17 an ounce.

Reuters