Published: Wed, October 09, 2019
Markets | By Otis Pena

Gold rises as risk sentiment sours on trade, Brexit uncertainty

Gold rises as risk sentiment sours on trade, Brexit uncertainty

Gold prices eased on Monday as the dollar firmed after a report said China was reluctant to agree to a broad trade deal with Washington, but bullion held a tight range as investors took a wait-and-see approach ahead of US-China talks this week.

Gold prices slipped for a third straight session on Tuesday, pressured by a stronger dollar and an uptick in equities ahead of upcoming U.S.

Gold futures find support near $1,500 an ounce.

Gold is up nearly 18 percent this year and last month hit $1,550 an ounce for the first time since April 2013.

"The stock market is increasing losses, so gold is taking back the safe haven role", ActivTrades chief analyst Carlo Alberto De Casa said, adding, "The markets are also fearing the trade talks and what's going on with Brexit".

For the week ahead, besides trade talks, we have a number of other key events for the U.S., including Fed governor Powell, speaking, the FOMC minutes and United States consumer Price Index. "It's a reflection of the trade war and uncertainty this has created among the Chinese authorities - they need to hedge their risks". "That's the reason why there's a small flight into safe-haven products", said Phillip Streible, senior commodities strategist at RJO Futures. There's $1,465 to the downside and $1,566 on the upside.

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On the European front, the prospects of an orderly Brexit seemed dim as a British source said that German Chancellor Angela Merkel told Prime Minister Boris Johnson by phone that a deal was "overwhelmingly unlikely".

Top-level U.S. -China trade talks are scheduled to resume later in the week, when Chinese Vice Premier Liu He meets with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington. They are now the world's biggest purchasers of the metal.

The country's gold reserves hit their highest in more than six years in September, as the trade war and rate cuts boosted investors' interest in non-dollar currencies and alternative ways of storing wealth.

Silver futures for December ended down $0.085, at $17.540 an ounce, while Copper futures for December settled at $2.5770 per pound, gaining $0.0145.

Platinum rose 1.1% to $886.50, while palladium climbed 0.8% to $1,673.25.

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