January 16, 2020 / 11:08 AM / 4 days ago

PRECIOUS-Gold steadies after U.S.-China deal, palladium jumps over 5%

(Adds comments, updates prices)

* Palladium scales record high of $2,393.38/oz

* Palladium may enter ninth straight year of deficit - UBS

* Platinum jumps to highest level since February 2017

By K. Sathya Narayanan

Jan 16 (Reuters) - Gold was little changed on Thursday, but still holding above the key $1,550 level as the signing of a preliminary trade deal between the United States and China failed to address concerns about tariffs and other core issues.

Record-setting palladium, on the other hand, soared more than 5%, while platinum jumped to its highest in almost three years.

Spot gold was at $1,555.56 per ounce as of 1309 GMT. U.S. gold futures were up 0.1% to $1,555.90.

The much-awaited Phase 1 trade deal was signed by U.S. President Donald Trump and Chinese Vice Premier Liu He on Wednesday, defusing an 18-month-long row that has roiled global markets.

“From many people’s perspective the deal looks quite underwhelming, there is still a lot which needs to be resolved ... that is one of the reasons why gold has upheld the level of $1,550,” OANDA analyst Craig Erlam said.

“The fact that the tariffs are still in place gives more hope that the Phase 2 is being taken more seriously.”

Analysts noted the Phase 1 deal fails to address structural economic issues, doesn’t fully eliminate the tariffs, and sets hard-to-achieve purchase targets, leaving a number of sore spots unresolved.

World stocks were hovering near record highs on Thursday after the signing of the deal, keeping gold prices in check.

Elsewhere, palladium gained 5% to $2,377 an ounce after hitting a record peak of $2,393.38 earlier in the session.

“Palladium’s price rally is supported by its strong fundamentals, as we expect the metal to enter its ninth straight year of market deficit this year,” UBS analysts said in a note.

“While higher prices should bolster scrap supply growth in 2020, we think mine supply growth is likely to remain constrained due to a lack of new projects.”

Platinum was up 1.8% at $1,038.42, having hit its highest since February 2017 at $1,040.25.

Platinum broke above the key psychological level of $1,000, which gave the market confidence to follow through and buy, said Bernard Sin, group head of trading at MKS.

Analysts also said the huge price difference between platinum and palladium had also been supporting platinum prices.

“At the end of the day, there is some demand (for platinum) as a substitute for palladium,” Sin added.

Both platinum and palladium are primarily used by automakers for catalytic converter manufacturing to clean car exhaust fumes.

Silver was steady at $18 per ounce.

Reporting by K. Sathya Narayanan and Swati Verma in Bengaluru; editing by Emelia Sithole-Matarise and Mark Potter

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