November 20, 2019 / 10:48 AM / 17 days ago

PRECIOUS-Gold gains as souring U.S.-China relations hit risk appetite

    * China condemns U.S. Senate measure on Hong Kong
    * U.S. Fed's October minutes due at 1900 GMT
    * Gold could rise into range of $1,480-$1,485 -technicals

 (Updates prices)
    By Asha Sistla
    Nov 20 (Reuters) - Gold prices rose to their highest levels
in nearly two weeks on Wednesday as U.S. Senate action on Hong
Kong created a potential obstacle to a trade deal between the
United States and China, denting appeal for riskier assets.
    Spot gold        was rose 0.2% to $1,475.83 per ounce at
1139 GMT and U.S. gold futures         was up 0.1% at $1,476.20.
    "The U.S. senate passing the Hong Kong democracy bill is
raising further risk of a trade deal running into problems and
it's causing some renewed risk-off in the markets," said Saxo
Bank commodity strategist Ole Hansen. 
    "We see stocks trading weaker, bond yields moving lower and
gold is ticking higher."
    The U.S. Senate passed two bills backing human rights in
Hong Kong and banning export of certain munitions to the
region's police forces. China condemned the move and called for
Washington to stop meddling in its internal affairs.
                                      
    European stocks edged away from their recent peak. U.S.
10-year bond yields slipped to their lowest in nearly three
weeks, also pressured by U.S. President Donald Trump's threat to
raise tariffs on Chinese imports if a trade deal cannot be
reached with Beijing.                         
    Investors are also waiting for the minutes from the U.S.
Federal Reserve's October policy meeting, due at 1900 GMT, for
additional cues on the monetary policy outlook.              
    The U.S. central bank cut interest rates three times this
year to help sustain U.S. growth but last month signalled that
there would be no further cuts unless the economy takes a turn
for the worse.             
    "The market is pricing in one cut over the next 12 months
and that will change very quickly on failure to reach a (trade)
deal," Saxo Bank's Hansen added.           
    Lower interest rates reduce the opportunity cost for holding
non-yielding bullion.
    Spot gold could rise into a range of $1,480-$1,485 an ounce,
according to Reuters technical analyst Wang Tao.         
    Silver        was flat at $17.15, platinum        edged 0.1%
higher to $911.16 and palladium        rose 0.2% to $1,766.37.
    Palladium prices could continue to firm on supply issues,
and $2,000 an ounce is a likely scenario for the autocatalyst
metal next year, said Ross Norman, a London-based independent
analyst.
    The metal hit a record high of $1,824.50 on Oct. 30, buoyed
by a sustained supply deficit.

 (Reporting by Asha Sistla in Bengaluru
Editing by David Goodman and Jane Merriman)
  
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