Gold eases as trade deal hopes whet risk appetite

Gold fell on Thursday, losing some of its safe-haven appeal as signs of progress in U.S.-China trade negotiations rekindled a rally in stock markets.

China and the United States have agreed to cancel, in phases, the tariffs imposed during their protracted trade war, the Chinese commerce ministry said, without specifying a timetable.

Spot gold was down 0.4% at $1,485.02 per ounce at 1208 GMT, while U.S. gold futures fell 0.5% to $1,485.90.

"There's excitement over the U.S.-China trade developments and that's reducing appetite for safe-haven assets," said FXTM analyst Lukman Otunuga.

An interim trade deal is widely expected to include a U.S. pledge to scrap tariffs scheduled for Dec. 15 on about $156 billion worth of Chinese imports, including cell phones, laptop computers and toys.

The tit-for-tat tariff war between the world's two biggest economies for the past 16 months have roiled financial markets and raised fears of a global economic slowdown, helping safe-haven bullion rise nearly 16% this year.

"If the trade talks go further in a positive direction, we will see more pressure on gold," said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.

"If prices fall below $1,480 an ounce, we will see a fresh low at $1,465."

The trade deal optimism, coupled with largely positive earnings reports from a host of companies, drove European shares to their highest level in four years.

"Although equity markets are pushing higher, major institutions are expressing concerns over the global economy," said FXTM's Otunuga, adding that low interest rates across the world and slowing global growth should ensure gold remained supported for the rest of 2019.

The euro zone economy is likely to grow slower than earlier expected this year and next, the European Commission forecast on Thursday, because of global trade conflicts, geopolitical tensions and Brexit.

Last month, the U.S. Federal Reserve cut interest rates for the third time this year to help sustain American growth, but signalled there would be no further reductions unless the economy took a turn for the worse.

Lower interest rates reduces the opportunity cost for holding non-yielding gold.

Spot gold may retest a support at $1,482 per ounce, and a break below this could lead to a drop to the Oct. 1 low of $1,458.50, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver dipped 0.5% to $17.54 per ounce, platinum rose 0.1% to $930.40 per ounce, while palladium gained 0.4% to $1,799.12 per ounce.