September 13, 2019 / 1:36 AM / 2 months ago

PRECIOUS-Gold treads water as trade optimism lifts risk assets

Sept 13 (Reuters) - Gold prices were little changed on Friday, on track for a third weekly decline as optimism over the U.S.-China trade talk fanned risk sentiment, while palladium hovered around a record peak on concerns about tight supplies of the autocatalyst metal.

FUNDAMENTALS

* Spot gold was trading flat at $1,497.81 per ounce, as of 0105 GMT. Prices have dropped about 0.6% so far this week, poised for a third consecutive weekly decline.

* U.S. gold futures dropped 0.1% to $1,505.50.

* Palladium hit a record peak of $1,621.55 on Thursday on concerns over tight supplies due to possible labour issues in South African mines.

* The metal dropped 0.5% to $1,609.85 in early trade.

* Hopes of progressing trade talks kept risk appetite up, after U.S. President Donald Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as he said an “easy” agreement would not be possible.

* The two sides have been making conciliatory gestures ahead of the talks, lowering the temperature between them and cheering investors.

* Asian equities rose, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.2%, weighing on safe-haven gold.

* Elsewhere, European Central Bank chief Mario Draghi pledged indefinite stimulus on Thursday to revive an ailing euro zone economy.

* The bigger-than-expected stimulus will increase pressure on the U.S. Federal Reserve and Bank of Japan to ease policy next week to support a world economy increasingly characterised by low growth and protectionist threats to free trade.

* Meanwhile, U.S. underlying consumer prices increased solidly in August, leading to the largest annual gain in a year.

* The World Gold Council (WGC) on Thursday published a set of guidelines for gold miners, responding to rising pressure from consumers, NGOs and governments to ensure the gold market is free from criminality, rights abuses and benefits local communities.

* In Hong Kong, long-running and sometimes violent street protests are helping tarnish its lustre as the main physical gateway of gold to China, the world’s top bullion buyer. (Reporting by Karthika Suresh Namboothiri in Bengaluru, Editing by Sherry Jacob-Phillips)

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