January 13, 2020 / 4:48 PM / 9 days ago

PRECIOUS-Gold slips as risk-on sentiment weighs, trade deal in view

 (Updates prices)
    * U.S., China due to sign trade deal Wednesday
    * SPDR Gold holdings fall to lowest since Sept. 16

    By Harshith Aranya
    Jan 13 (Reuters) - Gold prices fell on Monday as risk-on
sentiment, bolstered by the upcoming signing of a preliminary
U.S.-China deal and signs of de-escalation in the Middle East,
dampened demand for safe-haven bullion. 
    Spot gold        fell 0.8% to $1,549.50 per ounce by 1:50
p.m. EST (1850 GMT), having fallen 1% to $1,546.27 earlier in
the session.
    U.S. gold futures         settled down 0.6% at $1550.60.
    "You remove the risk of geo-political tensions rising and
you don't quite need gold to beef up your portfolio," said Bart
Melek, head of commodity strategies at TD Securities.
    Stock markets around the world lingered just below record
levels, buoyed by the expected signing of the Phase 1 U.S.-China
trade deal.            
    The trade agreement, due to be signed at the White House on
Wednesday, marks the first step towards ending an 18-month-long
trade dispute between the world's two largest economies.
               
    The U.S. dollar        also rose against a basket of rivals,
 making bullion more expensive for holders of other currencies.
       
    Signalling a further ramp down of trade tensions, a Wall
Street Journal report said on Saturday that Washington and
Beijing had agreed to semi-annual talks aimed at pushing reforms
and resolving disputes.             
    Gold, considered a safe investment during political and
economic turmoil, rose to a near seven-year peak of $1,610.90
last week after a U.S. drone strike killed a top Iranian
commander in Baghdad and Iran launched missiles against U.S.
bases in Iraq in retaliation.
    The rally, however, faded with a lack of further military
escalation in the region.                         
    Markets will still keep an eye on tensions with Iran over
the accidental shooting of a passenger plane, and the finer
points of the implementation of the U.S.-China deal, analysts
said.             
    Reflecting investor sentiment, holdings of the world's
largest gold-backed exchange-traded fund, SPDR Gold Trust      ,
fell 0.9% to 874.52 tonnes on Friday, their lowest since Sept.
16.          
    "Gold will remain vulnerable to spikes but could trend lower
in the interim, with a break of $1,540 potentially triggering a
move back towards $1,520," OANDA analyst Craig Erlam said in a
note.
    Elsewhere, palladium        rose 0.6% to $2,129.23 an ounce.
Silver        was down 0.6% at $17.98, while platinum       
fell 0.4% to $974.65.

 (Reporting by Harshith Aranya and Eileen Soreng in Bengaluru
Editing by Marguerita Choy and Tom Brown)
  
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