Gold has moment in spotlight as German jitters take toll

Singaprore (April 4)  Gold inched higher on Thursday as stock markets retreated from multimonth highs following weak data from Germany, while investors awaited clarity on the progress of US-China trade talks.

Platinum jumped more than 1% to its highest since mid-June last year at $887.59 per ounce.

Spot gold had risen 0.1% to $1,291.37 per ounce as of 10.12am GMT. US gold futures were unchanged at $1,295.70 an ounce.

“The German industrial data is the main market driver this morning,” said ActivTrades chief analyst Carlo Alberto de Casa, adding that falling equity markets were supporting gold.

European and Asian shares stepped back from eight-month highs, increasing investors' appetite for bullion.

German industrial orders fell at their sharpest rate in more than two years in February, compounding worries that Europe's largest economy had a weak start to 2019.

The country's leading economic institutes also slashed their 2019 growth forecasts and warned that the numbers could be much lower still if there is a no-deal Brexit.

“The whole of Europe is suffering and in the US, a lot of people are talking about the possibility of bringing down interest rates again because they have been hiking rates too quickly,” said Afshin Nabavi, MKS SA senior vice-president.

“So eventually if that happens, it will be really positive for the precious metals."

Meanwhile, US-China trade discussions made “good headway” last week and the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said.

“There is a lot of optimism around the idea that we will see a peaceful resolution and some agreement really soon,” said Michael McCarthy, chief market strategist at CMC Markets.

“However, if the trade talks drag out we could see further support for gold because of its implications on growth.”

Analysts now await nonfarm payrolls data on Friday for clues on the strength of the US economy.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for a third straight session on Wednesday. Holdings were at their lowest level since December 17 at 24.57-million ounces.

Among other precious metals, spot platinum was last up 1.4% at $886.79 an ounce. The auto-catalyst metal jumped 3.4% in the previous session, the most in more than two years. Palladium was up 0.4% at $1,410.15. Silver was down 0.4% at $15.07 per ounce.

Reuters

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