October 25, 2019 / 10:29 AM / 18 days ago

PRECIOUS-Gold set for best week in five, palladium sets record high

* Palladium hits record high of $1,785.50 an ounce

* Silver climbs to a one-month peak of $18.33 an ounce

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Adds comment, details, updates prices)

By Eileen Soreng

Oct 25 (Reuters) - Gold gained on Friday and was on course for its best week in five amid continued uncertainty around Brexit and the health of the global economy, while a sustained supply crunch propelled palladium to a record high.

Spot gold was up 0.7% at $1,513.52 per ounce at 1238 GMT, having earlier hit its highest since Oct. 10 at $1,514.24. The precious metal has gained about 1.5% this week.

U.S. gold futures were up 0.7% at $1,515.5.

“Brexit has gone into another limbo and there is still some uncertainty over the progress of (U.S.-China) trade talks. These are increasing risk aversion and pushing gold higher,” said FXTM analyst Lukman Otunuga.

The European Union agreed to London’s request for a Brexit deadline extension on Friday but set no new departure date, giving Britain’s divided parliament time to decide on Prime Minister Boris Johnson’s call for a snap election.

Johnson will push ahead with plans to leave the European Union and with the government’s domestic agenda even if lawmakers fail to back a snap election, his spokesman said.

On the trade front, top U.S. and Chinese trade officials will discuss plans on Friday for China to buy more U.S. farm products.

In return, Beijing will request the cancellation of some planned and existing U.S. tariffs on Chinese imports, people briefed on the talks told Reuters.

Gold has gained about 17% this year mainly due to the U.S.-China trade spat and the resulting impact on the global economy.

Safe-haven buying is clearly a good solution for investors given the current geopolitical and economic scenario, said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

Data on Thursday showed new orders for key U.S.-made capital goods and shipments declined in September, a sign that business investment remains soft amid the trade war, building the case for another U.S. rate cut next week.

Elsewhere, palladium was down 0.2% at $1,774.68 an ounce, having earlier hit an all-time high of $1,785.50.

Concerns about a supply crunch for the metal used in autocatalysts have helped lift palladium prices by about 40% this year, despite a weakening auto sector.

Palladium is in a strong uptrend supported by the fundamental story, Saxo Bank commodity strategist Ole Hansen said. “If we do break $1,785, we could see some additional buyers into that break, taking palladium to the 1,800 level.”

Silver climbed 3% to $18.31 per ounce after hitting its highest since Sept. 25 at $18.33. It was up about 4% for the week.

Platinum was up 0.9% at $931.84, on course for its best week in eight. (Reporting by Eileen Soreng in Bengaluru; Editing by David Clarke)

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