June 4, 2019 / 1:57 AM / 6 months ago

PRECIOUS-Gold holds near 3-month peak as trade fears boost safe-haven demand

June 4 (Reuters) - Gold prices rose on Tuesday, holding near a more than three-month high hit in the previous session, as worries over a global recession due to trade conflicts drove investors to find refuge in safe-haven assets.

FUNDAMENTALS

* Spot gold was up 0.1% at $1,326.49 per ounce by 0136 GMT, after touching its highest since Feb. 27 at $1,327.90 on Monday.

* U.S. gold futures rose 0.3% to $1,332.20 an ounce.

* The Nasdaq confirmed it was in a correction on Monday as stocks extended their recent sell-off amid the mounting trade worries. Global stock markets shed over $2 trillion in value in May.

* U.S. Secretary of State Mike Pompeo said on Monday that the United States is seeking to “level the playing field” with China after decades of unfair trade practices, but his Dutch counterpart said tariffs would hurt international trade.

* Meanwhile, U.S. President Donald Trump said the tariffs that his administration has imposed on Chinese imports were not pushing up U.S. inflation and were prompting manufacturers in the Asian powerhouse to move elsewhere.

* U.S. manufacturing growth slowed further in May to its weakest pace of activity in more than two-and-a-half years, defying expectations for a modest rebound, a national purchasing managers’ survey showed on Monday.

* Mexican officials said that Mexico can reach an agreement with the United States to resolve a dispute over migration that prompted U.S. President Donald Trump to threaten punitive tariffs, as high-level talks were set to begin in Washington.

* U.S. Treasury yields slip to their lowest levels since September 2017 following remarks from St. Louis Federal Reserve President James Bullard who said a U.S. rate cut may be “warranted soon” because of global trade tensions and weak U.S. inflation.

* A gloomy economic outlook is prompting traders to increase bets that the U.S. Federal Reserve will cut interest rates sooner rather than later.

* In late U.S. trading, federal funds futures implied traders saw about a 67% chance the U.S. central bank would reduce key short-term borrowing costs by a quarter point at its July 30-31 policy meeting.

* Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 2.21% to 759.65 tonnes on Monday from Friday, its best one-day percentage gain in nearly three years.

DATA AHEAD (GMT)

* 0130 Australia Current Account Balance Q1

* 0130 Australia Net Exports Contribution Q1

* 0130 Australia Retail Sales MM April

* 0430 Australia RBA Cash Rate June

* 0900 EU HICP Flash YY May

* 0900 EU HICP-X F&E Flash YY May

* 0900 EU Unemployment Rate April

* 1200 Brazil Industrial Output MM YY April

* 1400 US Factory Orders MM April

Reporting by Brijesh Patel in Bengaluru; editing by Richard Pullin

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