December 19, 2019 / 5:24 AM / a month ago

PRECIOUS-Gold inches up as Trump impeachment stokes political uncertainty

 (Updates prices)
    * Asian shares, dollar's reaction to impeachment muted
    * U.S. economy in good shape: Fed policymakers
    * SPDR Gold Trust Holdings up 0.3%

    By Asha Sistla
    Dec 19 (Reuters) - Gold prices edged higher on Thursday
after the U.S. House of Representatives voted to impeach
President Donald Trump, stoking fears of political uncertainty
in the world's largest economy.
    Spot gold        was up 0.1% at $1,476.69 per ounce, as of
0718 GMT. U.S. gold futures         edged up 0.1% to $1,480.70
per ounce.
    Trump became the third U.S. president to be impeached as the
Democratic-led House formally charged him with abuse of power
and obstruction of Congress in a historic step that will inflame
partisan tensions across a deeply divided America.             
    Cautious sentiment supported bullion, often seen as an
alternative investment during times of political and financial
uncertainty.
    "The impeachment is resulting in a slight increase of the
uncertainties and we're seeing gold inch higher on the back of
that," said ANZ analyst Daniel Hynes.
    "This news is also offsetting headwinds such as strong
equity markets, the (U.S.-China) trade deal and better economic
data."
    Although the reaction to the impeachment was largely muted,
Asian shares pulled back from a one-and-a-half year peak, while
the U.S. dollar        eased slightly against a basket of
currencies, making gold cheaper for holders of other currencies.
                  
    If the U.S. Senate convicts, "which would be unexpected,
then that throws next year's election in a very uncertain
place," Ilya Spivak, a senior currency strategist at DailyFx
said, adding that gold prices will then gain on risk aversion.
    Capping further gains in bullion, China's finance ministry
published a new list of six products from the United States that
will be exempt from tariffs starting Dec. 26.             
    Two U.S. Federal Reserve policymakers on Wednesday said the
U.S. economy is in good shape following three interest-rate cuts
this year, reiterating the consensus at the Fed for keeping
borrowing costs where they are for the time being.            
    Strong U.S. November manufacturing data released earlier
this week also cemented Fed's view. Gold is highly sensitive to
any reduction in interest rates, which decreases the opportunity
cost of holding non-yielding bullion.             
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust      , rose 0.3% to 883.29 tonnes on
Wednesday.          
    Elsewhere, palladium        edged up 0.4% to $1,930.18 per
ounce. Prices of the autocatalyst metal had hit an all-time peak
of $1,998.43 on Tuesday.
     Palladium prices are within a whisker of breaking above
$2,000 an ounce for the first time, with a gaping supply deficit
fuelling a remarkable run.             
    Silver        dipped 0.1% to $16.99 per ounce, while
platinum        slipped 0.4% to $931.68.

 (Reporting by Asha Sistla in Bengaluru, Editing by Sherry
Jacob-Phillips)
  
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