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Gold gains as U.S.-China trade truce triggers dollar sell-off


By K. Sathya Narayanan

(Reuters) - Gold gained one percent on Monday, hitting its highest in more than three weeks, boosted by a sell-off in the after the and called a truce on fresh trade tariffs for 90 days.

Meanwhile, palladium soared to a record, putting it about $12 short of parity with gold.

Spot gold was up 0.78 percent at $1,231.35 per ounce, its highest since $1,234.87 on Nov. 7.

U.S. gold futures settled up 1.1 percent at $1,239.60.

"Mainly it's the weakness in the today ... was down with respect to most of the currencies as a result of the outcome, at least what we call it as a positive outcome, from the meeting between U.S. and China," said Jeff Klearman, at

"It wasn't the most positive outcome that could have occurred but it was positive ... (it) has helped to weaken the dollar and support the "

U.S. and Chinese agreed to hold off on new tariffs during a Group of 20 summit in over the weekend after months of escalating tensions on trade and other issues.

The truce encouraged investors to sell the dollar <.DXY>, making gold cheaper for holders of other currencies. [USD/]

"The U.S.-trade ceasefire gave traders and investors a double-barrelled shot of upbeat news, following last week's surprisingly dovish comments coming from Jay Powell," Metals said in a note.

The is weaker as secondary world currencies were boosted, including the Chinese yuan, by the truce, resulting in "a bullish outside market force for the metals markets," Wyckoff said.

The U.S. had been the preferred safe haven this year as the U.S.-trade conflict unfolded against a backdrop of higher U.S. interest rates, denting gold's appeal.

"Bullion is likely to get a further boost if prices manage to stand firmly above $1,230 and particularly if they surpass $1,235," wrote in a note.

"A climb would become more likely if the Fed reduces the number of rate hikes in 2019/20."

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

Meanwhile, Palladium gained 2.3 percent to $1,205.00 an ounce after registering a record high of $1,221.95 earlier in the session.

The metal, mainly used in emissions-reducing auto catalysts for vehicles, has risen about 15 percent so far this year.

"It looks like there will be a breakthrough with China and the tariffs, which could translate into more demand moving forward, especially in cars," said Bob Haberkorn, at

Trump said Monday that China agreed to cut import tariffs on American-made cars.

Spot silver climbed 1.5 percent to $14.38 and platinum rose 1.1 percent to $806.40.

(Reporting by K. Sathya Narayanan, and in Bengaluru; Editing by and Jeffrey Benkoe)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 07:05 IST