November 21, 2019 / 7:26 AM / 24 days ago

Gold steady on concerns of delay in U.S.-China trade deal

(Reuters) - Gold prices held steady on Thursday, supported by concerns that U.S. legislation on Hong Kong could increase tensions between the United States and China and delay an interim trade deal.

FILE PHOTO: Employees process ingots of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant, one of the world's largest producers in the precious metals industry, in the Siberian city of Krasnoyarsk, Russia, November 22, 2018. REUTERS/Ilya Naymushin/File Photo

Spot gold was little changed at $1,471.02 per ounce by 0458 GMT. U.S. gold futures were down 0.2% at $1,471.20.

“The main driver in gold currently is the uncertainty about the trade deal. There is the possibility that the deal might not be completed this year, so that is a key support factor,” said John Sharma, an economist with National Australia Bank.

Completion of a “phase one” trade deal could slide into next year, trade experts and people close to the White House said.

The protracted trade dispute has pushed the precious metal, considered a safe asset in times of political and economic uncertainty, about 14% higher this year.

However, gold pared some gains from earlier in the session after China Vice Premier Liu He said he is ‘cautiously optimistic’ about reaching a phase 1 deal.

Dialling up tensions, the U.S. House of Representatives passed two bills to back protesters in Hong Kong and send a warning to China about human rights, with President Donald Trump expected to sign them into law.

This comes after China condemned Washington’s interference in the Hong Kong affairs and summoned an U.S. embassy official to demand that the U.S. stop its meddling.

“That (Hong Kong bills) could pose challenges to the trade deal ... there might be some progress because both the countries will see there is some benefit to cooperation, but the quality and duration (of a deal) is uncertain,” Sharma said.

Lower global shares and a tad weaker dollar supported bullion. [MKTS/GLOB] [USD/]

Minutes from the U.S. Federal Reserve’s October policy meeting released on Wednesday offered little guidance on what would cause policymakers to change their minds on the interest rate outlook.

The Fed cut interest rates three times this year, citing U.S.-China trade war and slowing global growth. Lower interest rates reduce the opportunity cost for holding the non-yielding bullion.

Under investors’ radar now is the U.S. weekly initial jobless claims due at 1330 GMT.

Elsewhere, silver shed 0.2% to $17.10 per ounce.

Silver demand will creep up by 1% this year, reducing global oversupply of the metal to the lowest since 2015, consultancy Metals Focus said.

Palladium rose 0.1% to $1,768.10 per ounce and Platinum fell 0.2% to $915.09.

Reporting by Sumita Layek in Bengaluru; Editing by Shailesh Kuber

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