Gold price firms as trade hopes dent dollar; palladium sets record high

New York (Feb 25)  Gold gained on Monday as the dollar eased on optimism that the United States and China are nearing a deal to end their trade war while palladium set another record high on deepening supply constraints.

Spot gold rose 0.1 percent to $1,329.54 an ounce at 1045 GMT and U.S. gold futures were down 0.1 percent at $1,331.70.

Capping gains were higher share prices, which rose on signs of progress in the U.S.-China trade conflict.

U.S. President Donald Trump on Sunday said he would delay an increase in U.S. tariffs on Chinese goods thanks to “productive” trade talks and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.

“The risk sentiment in the equity market is pretty positive against the backdrop of the U.S.-China trade talk news and some support from the Chinese government, which is negative for gold,” said Julius Baer analyst Carsten Menke.

“At the same time, we see that the dollar is a tad lower, which is providing a bit of support to gold prices.”

Menke added that expectations of easing trade tensions between U.S. and China would be positive for physical demand from major consumer China.

The dollar index, which measures the greenback against a basket of other currencies, was down 0.1 percent.

“Gold is not quite seeing the boost from Trump’s tweet than you might have expected ... Still, it continues to look bullish, with $1,320 having provided adequate support late last week,” OANDA senior market analyst Craig Erlam wrote in a note.

Reuters