January 17, 2020 / 11:30 AM / a month ago

PRECIOUS-Gold edges higher but faces first weekly decline in six

(Adds comments, updates prices)

* Palladium hits record of $2,401.98/oz, eyes biggest weekly gain in 4 years

* Platinum eases off near 3-year high

* World shares rise to record highs after China GDP data

By K. Sathya Narayanan

Jan 17 (Reuters) - Gold edged higher on Friday but was on track to post its first weekly decline in six as solid Chinese data and a preliminary U.S.-China trade deal improved risk appetite.

Palladium jumped over 3% to register another record high as the market grapples with deep supply shortages.

Spot gold was up 0.1% at $1,554.69 per ounce at 1401 GMT, but was heading for a weekly drop of around 0.5% - its biggest since early November. U.S. gold futures rose 0.3% to $1,554.70.

“You would expect gold to trade a little bit lower after the economic data from China. (But) what is pushing gold prices higher is the sense of caution as to what to expect after the Phase 1 trade deal,” said FXTM analyst Lukman Otunuga.

“I think the sense of uncertainty and caution is encouraging investors to take positions in gold.”

World shares hit record highs after data showed China’s economy was stabilizing and the world’s second-largest economy ended 2019 on a somewhat firmer note as the trade truce revived business confidence.

However, investors were still nervous as the Phase 1 deal failed to address tariffs and some important core issues.

“The growth prospects and inflation outlook are still fragile which supports gold prices but this is just a movement of consolidation at the moment,” said SP Angel analyst Sergey.

“We saw (a) couple of central banks cutting rates yesterday,” Raevskiy said, adding that euro zone economic growth was still a big question among investors.

A Reuters poll showed that while the outlook for growth and inflation remained lukewarm in the euro zone, the chances of a recession have faded somewhat.

In other metals, palladium rose 2.8% to $2,378.40 an ounce, after hitting a record high of $2,401.98 earlier. The auto-catalyst metal was set for its biggest weekly gain since March 2016, having risen about 13% so far.

“There was no news that could have justified the upswing apart from the good EU new car registration figures that were reported yesterday,” Commerzbank analysts said in a note, adding a prolonged supply-deficit was still supporting prices.

Platinum jumped 1% to $1,014.25 after hitting its highest since February 2017 at $1,041.05 in the previous session. It was on track to post its biggest weekly gains since the end of August.

Speculative purchases and technical buying have been driving platinum prices higher, Commerzbank analysts said.

Silver advanced 0.5% to $18.02 per ounce. (Reporting by K. Sathya Narayanan in Bengaluru; editing by Emelia Sithole-Matarise and David Evans)

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