Gold holds near 8-month highs on trade concerns, Fed rate views

By: | Published: January 30, 2019 7:21 AM

Gold prices on Wednesday held near eight-month highs hit in the previous session on concerns over U.S.-China trade relations and ahead of the U.S. Federal Reserve's policy decision, where interest rates will likely be kept unchanged.

Gold holds near 8-month highs on trade concerns, Fed rate views

Gold prices on Wednesday held near eight-month highs hit in the previous session on concerns over U.S.-China trade relations and ahead of the U.S. Federal Reserve’s policy decision, where interest rates will likely be kept unchanged.

FUNDAMENTALS
* Spot gold was steady at $1,311.41 per ounce by 0050 GMT. Prices rose to their highest since May 15 at $1,311.98 on Tuesday. U.S. gold futures rose 0.1 percent at $1,310 per ounce.
* Traders await possible clues from the Federal Reserve on whether it might pause from its current rate-hike campaign. Fed policy-makers began a two-day policy meeting on Tuesday.
* The Fed raised interest rates four times last year.
* Some U.S. central bank officials have said they will be patient in raising rates given the stalemate over global trade, the U.S. federal government shutdown, and waning business and consumer confidence.
* Fed policymakers are expected to release a policy statement on Wednesday at 1900 GMT, followed by a press conference with Fed Chairman Jerome Powell.
* Gold tends to rise on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
* Adding to investors’ jitters were criminal charges against China’s Huawei Technologies Co. Ltd. for violating U.S. sanctions against Iran.
* Investors fear the charges could complicate high-level trade talks set to begin on Wednesday where China’s Vice Premier Liu He will meet with U.S. Trade Representative Robert Lighthizer and others.
* British lawmakers rejected most amendments that aimed to keep Britain from leaving the European Union without a deal, reviving worries of a chaotic withdrawal from the trading bloc that would damage the UK economy.
* Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.01 percent to 823.87 tonnes on Tuesday from Monday.
* Swiss jewellery imports rose by two-fifths over the course of the year to 16 billion francs ($16.1 billion), as more gold jewellery — mainly heading for smelting, or refining — poured into the country, primarily from the United Arab Emirates.
* Swiss gold exports fell last year to their lowest since the records became public in 2012. Imports slipped to their weakest since 2014, customs data showed on Tuesday.
* Jitters over global growth and a possible pause to U.S. monetary tightening are expected to set gold prices up for gains in 2019, a Reuters poll showed on Tuesday, but the metal will struggle to break above recent highs.
* Palladium prices are tipped for their highest year ever, forecast to average $1,200 an ounce in 2019 before falling back slightly in 2020, a Reuters poll showed.

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