November 14, 2019 / 4:46 AM / 25 days ago

PRECIOUS-Gold gains as weak China data dents risk appetite

 (Updates prices)
    * China's industrial production growth slows sharply in Oct
    * Deterioration in Hong Kong will further support gold -
analyst
    * Fed Chair Jerome Powell signals rate-cut pause

    By Sumita Layek
    Nov 14 (Reuters) - Gold prices inched up on Thursday as
Asian equities turned lower after weaker-than-expected economic
data out of China weighed on risk appetite, boosting demand for
safe-haven assets.
    Spot gold        was up 0.2% at $1,466.51 per ounce, as of
0752 GMT, while U.S. gold futures        rose 0.3% at $1,467.10
per ounce.
    Asian stocks fell after China's industrial output grew
significantly slower than expected in October, as weakness in
global and domestic demand and the drawn-out Sino-U.S. trade war
weighed on activity in the world's second-largest economy. 
                        
    "Gold is being supported as the Chinese industrial
production and retail sales came way below expectations," OANDA
analyst Jeffrey Halley said.   
    "Another deterioration in Hong Kong this week will further
support gold, but it's really all about this ongoing trade
talks, which is becoming like a broken record."
    China's Commerce Ministry said cancelling tariffs is an
important condition for reaching trade agreement with the U.S.,
a day after U.S. President Donald Trump threatened to ramp up
tariffs on Chinese goods if the countries failed to reach a deal
on trade.                         
    U.S. Federal Reserve Chair Jerome Powell on Wednesday told
the Joint Economic Committee that negative interest rates sought
by Trump are not appropriate for the U.S. economy right now.
            
    He also added that the central bank would probably stop
(with interest rate cuts) where it is unless there is a
"material" change in the economic outlook. 
    "Investors are stuck with rising trade tensions with Trump
threatening additional tariffs again, but what's weighing on
gold is the hawkish stance from the Fed overnight, saying rate
cuts are on hold for now," ANZ analyst Daniel Hynes said.    
    "In the long term, the backdrop is pretty conducive. With
the global central banks being accommodative, gold will get its
support."     
    The Fed has cut interest rates thrice this year to help
sustain U.S. growth. A lower interest rate reduces the
opportunity cost for holding the non-yielding bullion.
    In Hong Kong, anti-government protesters paralysed parts of
the city for a fourth day, forcing school closures and blocking
highways and other transport links.             
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust       fell 0.04% to 896.77 tonnes on
Wednesday.          
    Elsewhere, palladium        climbed 1% to $1,726.50 per
ounce. Silver        rose 0.2% to $16.98 per ounce, while
platinum        gained 0.3% to $876.35 per ounce.

 (Reporting by Sumita Layek and Diptendu Lahiri in Bengaluru;
Editing by Sherry Jacob-Phillips)
  
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