Gold gains as souring US-China relations dent risk appetite
Concerns about the coronavirus outbreak in China keep the safe-haven bid in gold and the dollar alive.
Gold prices rose to their highest in nearly two weeks on Wednesday as USSenate measures on Hong Kong posed a potential roadblock for a trade deal between the United States and China, denting appeal for riskier assets.
Spot gold was up 0.3 per centat $1,476.50 an ounce by 1015 GMT and USgold futures rose 0.2 per cent to $1,477.
"The USsenate passing the Hong Kong democracy bill is raising the further risk of a trade deal running into problems and it's causing some renewed risk-off in the markets," said Saxo Bank commodity strategist Ole Hansen.
"We see stocks trading weaker, bond yields moving lower and gold is ticking higher."
The USSenate passed two bills backing human rights in Hong Kong and banning the export of certain munitions to the region's police forces. China condemned the move and called for Washington to stop meddling in its internal affairs.
European stocks steered away from a recent peak and US10-year bond yields slipped to their lowest in nearly three weeks, also pressured by USPresident Donald Trump's threat to raise tariffs on Chinese imports if a trade deal cannot be reached with Beijing.
Investor eyes will also be on minutes from the USFederal Reserve's October policy meeting, due at 1900 GMT, for additional cues on the monetary policy outlook.
The UScentral bank cut interest rates three times this year to help to sustain USgrowth but last month signalled that there would be no further cuts unless the economy takes a turn for the worse.
"The market is pricing in one cut over the next 12 months and that will change very quickly on failure to reach a (trade) deal," Saxo Bank's Hansen added.
Lower interest rates reduce the opportunity cost for holding non-yielding bullion.
Spot gold could rise into a range of $1,480-$1,485 an ounce, according to Reuters technical analyst Wang Tao.
Elsewhere, silver was flat at $17.14, platinum was down 0.1 per cent at$909.14 and palladium was little changed at $1,764.50.
Palladium prices could continue to firm on supply issues, and $2,000 an ounce is a likely scenario for the autocatalyst metal next year, said Ross Norman, a London-based independent analyst.
The metal hit a record high of $1,824.50 on October30, buoyed by a sustained supply deficit.