May 3, 2018 / 4:28 AM / in 8 months

PRECIOUS-Gold extends gains; all eyes on U.S.-China trade talks

    * Spot gold may bounce again towards $1,317/oz - Technicals
    * U.S. delegation in Beijing on Thursday and Friday

 (Updates prices)
    By Eileen Soreng
    BENGALURU, May 3(Reuters) - Gold prices rose for a second
session on Thursday after the U.S. Federal Reserve held interest
rates steady as expected at the end of a two-day policy meeting,
while investors awaited U.S.-China trade talks.
    Spot gold        rose 0.2 percent to $1,307.05 per ounce at
0705 GMT. U.S. gold futures         for June delivery rose 0.2
percent to $1,307.60 per ounce.
    "The inflation numbers this week did point to a potential
acceleration in those (interest) rate hikes... But after the
FOMC meeting yesterday that appears to be less likely and so
we're seeing assets such as gold being bought at the back of
that," said ANZ analyst Daniel Hynes.
    Non-yielding gold is highly sensitive to rising U.S.
interest rates as it becomes less attractive compared with
assets that bear interest.
    The Fed left its benchmark interest rates unchanged in a
target range of between 1.50 percent and 1.75 percent. The
central bank raised rates in March and forecasts another two
increases this year.             
    Investors also awaited the U.S.-China trade talks between
U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier
Liu He due on Thursday.
    "Safe-haven buying has been absent, of late... But there
have been some signals for the past few days that the
negotiations won't be as smooth as expected so that would
definitely be a focus, particularly now that we have gotten past
the FOMC meeting," Hynes added. 
    A breakthrough deal to fundamentally change China's economic
policies is viewed as highly unlikely during the two-day meet,
though a package of short-term Chinese measures could delay a
U.S. decision to impose tariffs on $50 billion worth of Chinese
exports.                          
    Asian shares slipped on Thursday as hopes waned for real
progress in U.S.-China trade talks, while the U.S. dollar
consolidated recent bumper gains after the Federal Reserve
reaffirmed the outlook for more rate hikes this year.
                  
    Spot gold may bounce again towards a resistance at $1,317
per ounce as it has found a strong support at $1,302, according
to Reuters technical analyst Wang Tao.             
    Meanwhile, gold demand posted its weakest start to the year
in a decade, the World Gold Council said on Thursday, as prices
of the metal stagnated and the threat of rising interest rates
led investors to seek better returns elsewhere.             
    Among other precious metals, spot silver        rose 0.2
percent to $16.38 per ounce.
    Platinum        climbed 0.4 percent to $893.74 per ounce,
while palladium        was up 0.5 percent to $964.50 per ounce.

 (Reporting by Eileen Soreng in Bengaluru; Editing Sherry
Jacob-Phillips and Sunil Nair)
  
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