Gold Gains On U.S.-China Tensions; Markets Eye Fed Minutes
(November 19, 2019 - by Sumita Layek, Gold Market Report)
* U.S. Fed minutes from October meeting due at 1900 GMT
* China condemns U.S. Senate measure on Hong Kong
* Gold may rise to $1,480-$1,485/oz range- technicals
Nov 20 (Reuters) - Gold prices firmed on Wednesday as trade and political tensions ratcheted up between United States and China, while investors awaited minutes from the U.S. Federal Reserve's October meeting.
U.S. President Donald Trump on Tuesday threatened to raise tariffs on Chinese imports if no deal is reached with Beijing.
The U.S. Senate passed a bill backing human rights in Hong Kong and passed a second legislation to ban export of certain munitions to Hong Kong police forces. China condemned the moves and summoned an U.S. embassy official to demand that the U.S. stop its meddling.
"There are concerns that the latest bill passed in the U.S. in support of the Hong Kong protesters might derail the progress in the U.S.-China trade deal," Ilya Spivak, a senior currency strategist at DailyFx said.
However, gains in gold are limited as investors are "not quite prepared to take a firm bet ahead of the U.S. Federal Reserve's minutes," Spivak added.
Investors are awaiting minutes from the Fed's October policy meeting, due at 1900 GMT, for further cues on the monetary policy outlook.
The U.S. central bank cut interest rates thrice this year to help sustain U.S. growth, but had signaled last month that there would be no further cuts unless the economy takes a turn
for the worse.
"Given the trade risks, the decline in manufacturing activity globally, there could be one more rate cut (in the next year), but overall there will be a longer pause," said Hitesh
Jain, vice president, Yes Securities.
Lower interest rates reduce the opportunity cost for holding the non-yielding bullion.
Asian shares moved lower on conflicting messages on the trade front, in contrast to the strong rallies seen recently in global equities markets.
"The precious metal, though facing bearish pressures over a strong rally in the equities market, will remain vigorous over subdued global growth and geopolitical uncertainties in Q4,"
Phillip Futures analyst Benjamin Lu said in a note.
In Hong Kong, the last band of anti-government protesters trapped inside a besieged Hong Kong university were weighing a narrowing range of options as police outside appeared ready to simply wait them out.
