October 15, 2019 / 10:35 AM / a month ago

PRECIOUS-Gold steadies before Brexit summit, palladium hits record high

(Updates prices)

* Palladium hits record high of $1,730.08/oz

* Britain and EU to meet at summit starting Thursday

By Sumita Layek

Oct 15 (Reuters) - Gold steadied on Tuesday, moving in a tight range, after hopes of progress in U.S-China trade talks were tempered and ahead of a summit that will determine how Britain leaves the European Union.

Palladium hit a record high, continuing its stellar run driven by a sustained supply crunch.

Spot gold was little changed at $1,492.91 per ounce as of 1211 GMT. U.S. gold futures was flat at $1,497.20.

“We’ve had the initial lukewarm response to phase one of the trade deal ... the risk of profit-taking in gold has not really emerged. We’re still holding onto levels not far from the $1,500 area,” Saxo Bank commodity strategist Ole Hansen said.

“We continue to trade sideways, waiting for the next driver, and right now the market is not providing much in terms of direction.”

The United States on Friday outlined the first phase of a trade deal and suspended this week’s scheduled tariff hikes on Chinese goods. Bloomberg reported on Monday that China wanted more talks to hammer out the details of the phase-one deal before signing it.

Meanwhile, European stocks climbed to two-week highs as investors cheered comments from the EU’s chief Brexit negotiator that a deal with Britain over the terms of their divorce was still possible this week.

Investors are keeping a close eye on a make-or-break summit between Britain and the EU on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on Oct. 31, a disorderly no-deal exit or a delay.

“The Brexit narrative seems to be playing as a basic risk on/off catalyst, with echoes into bond yields driving near-term gold swings,” said Ilya Spivak, a senior currency strategist at DailyFx.

“The markets remain priced for a far more dovish U.S. Federal Reserve outlook than the central bank has signed up for.”

The Fed meets at the end of the month to decide on whether to implement further rate cuts.

Palladium was up 0.3% at $1,719.64 an ounce, after hitting a record $1,730.08. The metal used in vehicle exhausts to reduce harmful emissions has rallied more than $300 since early August, when it touched a near two-month low.

“Palladium is one of the few commodities in the market right now where we’ve got a strong momentum and strong fundamentals both supporting prices,” Saxo Bank’s Hansen said.

Silver fell 0.3% at $17.60 per ounce and platinum rose 0.1% to $894.08. (Reporting by Sumita Layek in Bengaluru; Additional reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Dale Hudson and Chizu Nomiyama)

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