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Gold Glitters as trade deadline nears; Fed verdict in Focus

10 Dec 2019 7:31 pm
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Mumbai (Commodities Control) - Gold rose on Tuesday on uncertainty over U.S.-China trade talks ahead of a Dec. 15 tariff deadline while investors looked to the U.S. Federal Reserve's policy meeting for cues on its 2020 monetary outlook.

Spot gold rose 0.4% to $1,467.00 an ounce at 1323 GMT, while U.S. gold futures gained 0.5% to $1,471.50. Silver gained 0.4% to $16.66.

If Washington proceeds with the earmarked tariffs, risk aversion is likely to engulf financial markets until the end of the year, boosting gold.

A weaker dollar against versus major currencies also offered support for bullion.

UBS notes, Gold has defended the $1,450/oz level despite a U.S.-China trade deal appearing increasingly likely and unexpectedly strong U.S. jobs data. However, if the Fed shifts to a more hawkish assessment, gold is at risk from further repositioning.

Technically this could pull prices back to $1,410/oz.

The Fed is expected to keep rates unchanged at its two-day meeting ending on Wednesday, with investors awaiting policymakers' forecasts for U.S. economic growth.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

Markets are also focused on the British election on Thursday after the country's economy grew at its slowest annual pace in nearly seven years in October.

The European Central Bank is expected to keep interest rates steady at its meeting this week.

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