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Gold near 2-week lows as dollar rebounds over trade caution

Gold prices on Thursday held near two-week lows touched in the previous session, as the dollar recouped losses after cautious comments from U.S.1 percent to $1,318.50, as of 0340 GMT.The dollar index, which measures the greenback against a basket of currencies, bounced back from three-week lows.
U.S.Trade Representative Robert Lighthizer told a Congressional hearing it is too early to predict the outcome of ongoing trade talks with Beijing and America will need to maintain the threat of tariffs on Chinese goods for years even if the two sides strike a deal.ReutersGetty Images Trade Representative Robert Lighthizer dented investors’ hopes for a closure to the tariff war with China.
As of 0340 GMT, spot gold and the U.S.gold futures were down 0.1 percent at $1,318.50 and $1,320.10 per ounce respectively.The safe-haven metal slipped to its lowest since Feb. 15 at $1,316.43 in the previous session and dropped for the first time in five months. Lighthizer told a Congressional hearing it is too early to predict the outcome of ongoing trade talks with Beijing and the United States will need to maintain the threat of tariffs on Chinese goods for years even if the two sides strike a deal.
“There is some uncertainty about the trade deal and some of the safe-haven (demand) has gone to the U.S.
dollar. That has taken a bit of a bid from gold,” said John Sharma, economist, National Australian Bank.
The dollar index, which measures the greenback against a basket of currencies, bounced back from three-week lows.”Overall, gold is expected to go up with some corrections and prices will move around the $1,310-$1,330 levels depending on the dollar,” Sharma said, adding, “main support comes from Federal Reserve’s dovish stance and a lot of central banks are keen on accumulating gold.” The U.S.Central Bank will stop shrinking its $4 trillion balance sheet later this year, Fed Chairman Jerome Powell said on Wednesday, ending a process that investors say works at cross-purposes with the Fed’s current pause on interest-rate hikes. During his testimony to the Senate Banking Committee on Tuesday, Powell reiterated that the Fed will be patient in hiking interest rates.
“The precious metal’s recent consolidation is supported by the indecision the financial markets have in pricing in what will be the Fed’s next move,” OANDA senior market analyst Edward Moya said in a note. “Gold may struggle climbing higher until we see further deterioration in U.S. data, that would seal the market expectation for the next move to be a rate cut.
” Investors are also monitoring the tensions between India and Pakistan, with the two countries engaged in retaliatory attacks, analysts said. Meanwhile, spot palladium further backed away from its all-time peak of 1,565.09 per ounce, scaled earlier in the week, and was down 0.1 percent at $1,527.50 on Thursday. The autocatalyst surged 21 percent so far this year on widening supply tightness in the market.Spot silver dipped 0.1 percent to $15.72 per ounce, while platinum was down 0.4 percent at $861.50, off its more than three-month highs of $871.94 hit in the previous session.

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Palladium breaks $1500 level on supply troubles; weak dollar lifts gold

Palladium prices broke above $1,500 for the first time on Wednesday due to a prolonged supply deficit, while gold rose to a fresh 10-month high as the dollar struggled before the U.S.
Minutes of Fed’s Jan meeting due at 1900 GMT.Palladium up 19 percent this year, among best performing metals.ReutersGetty ImagesPalladium prices broke above $1,500 for the first time on Wednesday due to a prolonged supply deficit, while gold rose to a fresh 10-month high as the dollar struggled ahead of the U.S. Federal Reserve’s policy meeting minutes.Palladium is crucial in the making of catalytic converters used in exhaust systems of vehicles, and an improvement in demand from the auto sector has supported the metal’s surge.”Demand (for palladium) is increasing year by year because of catalyst demand for gasoline engines.
Environmental requirements are getting stronger, which means more palladium is needed in (manufacturing) a car,” said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.Furthermore, the supply deficit is likely to widen this year as stricter emissions standards increase demand for catalytic converters, Britain-based autocatalyst manufacturer Johnson Matthey said last week.
Spot palladium rose to an all-time high of $1,500.50 per ounce and was 0.7 percent higher at $1,490 as of 0800 GMT. The autocatalyst metal has gained almost 19 percent so far this year, making it one of the best performing metals.Gold prices hit their highest since April 19, 2018 as the dollar was capped on falling U.S.
Treasury yields and optimism surrounding trade talks between the United States and China.U.S. President Donald Trump said on Tuesday that trade talks with China were going well and suggested he was open to pushing off the March 1 deadline to complete negotiations.
Most investors expect uncertainties over U.S.China trade talks to end this week, which will weaken the dollar and support gold, said Hareesh V, head of commodity research at Geojit Financial Services.Progress in trade discussions between the world’s top two economies has whisked off the safe-haven appeal for the dollar, making gold more attractive to investors.Spot gold was up 0.1 percent at $1,342.46 per ounce after rising to a high of $1,346.73 earlier in the session.U.S.gold futures were steady at $1,345.40.Investors are now looking ahead to the release of U.S.Federal Open Market Committee’s minutes from its Jan. 29-30 policy meeting at 1900 GMT.”The dovish shift in U.S.Federal Reserve language over the year-to-date has improved the fundamental outlook for gold prices,” Fitch Solutions said in a note.”A less steep trajectory for U.S. rate hikes bolsters our existing view that U.S. dollar gains are behind us and that this will help put a floor under gold prices.”Spot gold may peak around a resistance at $1,351 per ounce, as suggested by a projection analysis and a rising trendline, according to Reuters market analyst Wang Tao.Among other precious metals, platinum was down 0.2 percent at $815.63 per ounce, while spot silver was up 0.2 percent at $16.01.

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