September 25, 2019 / 5:15 AM / 25 days ago

Gold off three-week peak but remains supported on Trump impeachment inquiry

(Reuters) - Gold prices inched lower on Wednesday as some investors booked profit, but the metal remained supported below a three-week peak hit in the prior session as the launch of a formal impeachment inquiry into President Donald Trump stoked political worries.

FILE PHOTO: Gold bars and coins stacked in the safe-deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder/File Photo

Democrats in the U.S. House of Representatives on Tuesday launched a formal impeachment inquiry into Trump, accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year’s election.

Spot gold was down 0.2% to $1,529.14 per ounce, as of 0617 GMT, after having risen to its highest level since Sept. 5 at $1,535.60 on Tuesday. U.S. gold futures fell 0.2% to $1,536.60 per ounce.

“Compounding into the macro weakness we have the tumult in political landscape brought about by the impeachment process,” said AxiTrader market strategist Stephen Innes.

“The risk could lead to lower equity market and undermine the U.S. dollar and that could be good for gold.”

Also, supporting the yellow metal was weak U.S. consumer confidence data that ratcheted up concerns over the global economy.

“It stoked Fed rate-cut speculation, driving down yields and thereby boosting the relative appeal of non-interest-bearing assets epitomised by gold,” said Ilya Spivak, a senior currency strategist at DailyFx.

Meanwhile, the dollar steadied in Asian trade, and stocks fell as U.S. political uncertainty added to worries about economies strained by the Sino-U.S. trade row.

Trump’s rhetoric on China turned harsh once again on Tuesday as he delivered a stinging rebuke to Beijing’s trade practices at the United Nations General Assembly, saying he would not accept a “bad deal” in U.S.-China trade negotiations.

“The market is still waiting for some more definitive news on the trade front... Investors who are long are going to sell at such a high level,” AxiTrader’s Innes said.

The tone of Trump’s speech was at odds with some recent steps by China to meet his request for purchases of more American farm products. The two parties are meeting again in October for talks.

Spot gold may rise more to $1,546 per ounce, as it has cleared a resistance at $1,524, according to Reuters technical analyst Wang Tao.

Among other precious metals, palladium dipped 0.2% to$1,670.06 an ounce, after hitting a record peak of $1,676.53 earlier in the session.

Silver fell 0.4% to $18.51 an ounce, while platinum dropped 0.3% to $950.60.

Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu

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