Gold Prices Edge Higher as Investors Watch Tariff Talks and the Fed

Gold prices inched up for a third session early Wednesday as uncertainty about international trade policy helped to buttress the yellow ahead of the Federal Reserve’s last policy statement and interest-rate projections of 2019.

The U.S. central bank’s update will be released at 2 p.m. ET about a half-hour after gold settles for the session. Although no one is expecting significant shifts from the central bank, investors will closely watch for clues on the outlook for monetary policy.

February gold GCG20, +0.27% on Comex picked up $3, or 0.2%, to $1,471.10 an ounce, after a similar rise on Tuesday. March silver SIH20, +0.26%, added a penny, or less than 0.1%, to reach $16.710 an ounce, following a 0.4% gain in the last session.

After three interest rate cuts this year, the Fed is expected to keep interest rates unchanged for an extended period as the central bank harbors fears that the U.S.-China trade clashes could hurt the U.S. economy and worsen a slowdown elsewhere in the globe, market strategists say.

For that reason, developments on the China-U.S. trade front have served as an important catalyst for precious metals, keeping the asset trading within a range between $1,470 and about $1,500 over the past several weeks.

Optimism that a trade deal can be achieved as a Sunday deadline for a further increase in China import duties looms, has helped to put pressure on bullion, however.

“Gold topside so far remains limited in this current environment as momentum remains for higher bond yields going into year-end,” wrote Stephen Innes, chief Asia market strategist at AxiTrader, in a daily research note.

Still, uncertainty on progress toward a partial U.S.-China trade pact has knocked asset prices around and tempered a recent run-up in risky securities like stocks and oil futures.

White House advisers Larry Kudlow and Peter Navarro have both indicated that tariffs scheduled to hit Chinese goods on Dec. 15 are “still on the table,” following a report from the Wall Street Journal that said both parties were bracing for a delay of a tariff increases on China goods on Sunday, which would be read as an escalation of tensions.

On top of that, the U.K.’s general election is scheduled for Thursday, which could help to determine the course of Britain’s exit from European Union, but a narrowing margin in recent polling for Prime Minister Boris Johnson and his Conservative Party has injected some doubt into the outcome.

“For now, the narrowing the UK election polls is given rise to Brexit uncertainty and is keeping a small bid under gold as this morning open,” Innes wrote.

By
Mark
DeCambre