Gold perks up after Fed minutes but gains capped by trade optimism

GOLD eked out gains on bets of further US Federal Reserve rate cuts following the release of minutes from the central bank’s September policy meeting on Wednesday, but hopes of a SinoUS trade deal buoyed risk sentiment and capped bullion’s gains.

Spot gold was up 0.2% at $1,507.52 per ounce by 02:10 p.m. EDT (1810 GMT). US gold futures settled up 0.6% at $1,512.80 an ounce.

“The fact is that the Fed is adding a significant amount of liquidity to the market and they are increasing the money supply and that in my opinion is why gold is firmer today,” said David Meger, director of metals trading at High Ridge Futures.

Fed Chairman Jerome Powell on Tuesday flagged openness to further rate cuts to fend off global economic risks and said the Fed would “soon announce measures to add to the supply of reserves over time.”

The minutes showed most Fed policy makers supported the need for an interest rate cut in September.

Capping bullion’s gains, stocks rose as media reports raised hopes of progress in trade talks between the US and China.

High-level talks involving Chinese Vice-Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are planned for Thursday and Friday.

“We do have some light optimism on the trade front. However, when everybody steps away, they realize that the real chances of a trade deal, even partial, are small at best,” High Ridge Futures’ Mr. Meger said.

A Bloomberg report on Wednesday said China was still open to agreeing to a partial trade deal with the US, citing an official with direct knowledge of the talks.

On the Brexit front, European Union officials denied on Wednesday that Brussels was preparing a major concession to the United Kingdom to secure an agreement.

Also on the radar were other major geopolitical developments, with Turkey launching a military operation against Kurdish fighters in northeast Syria on Wednesday.

“There are lingering geopolitical matters that have many traders and investors looking to the safe-haven metals as an investment,” Jim Wyckoff, senior analyst with Kitco Metals, wrote in a note.

Silver was up 0.3% at $17.77 an ounce, while platinum rose 0.2% to $891.73.

Palladium gained 0.3% to $1,680 an ounce. Prices had risen to $1,691.34 an ounce earlier, hovering just below last week’s record peak.

“Palladium is likely to stay in a wide deficit. Likely firm demand from the automotive sector will help keep the market tight,” James Steel, chief precious metals analyst at HSBC wrote in a note. —