Gold hovers near two-week low as US-China trade optimism dents demand

Gold prices hovered on Tuesday near their lowest in more than two weeks, as optimism over a possible U.S.-China trade deal dented demand for the safe-haven metal, while investors looked forward to major central bank policy announcements this week.

Spot gold was flat at US$3,981.67 (HK$31,057) per ounce, as of 0024 GMT, after dropping more than 3 percent in the previous session to its lowest level since October 10.

U.S. gold futures for December delivery lost 0.6 percent to US$3,996.50 per ounce.

On Sunday, top Chinese and U.S. economic officials hashed out the framework of a trade deal for U.S. President Donald Trump and his Chinese counterpart Xi Jinping to decide on later this week.

Trump said he thought a deal would be reached with China and announced a flurry of deals on trade and critical minerals in Malaysia with four Southeast Asian nations during the first stop of a five-day Asia trip.

The U.S. Federal Reserve is widely expected to cut interest rate at the end of its policy meeting on Wednesday.

Investors await any forward-looking language from Fed Chair Jerome Powell.

Meanwhile, the European Central Bank and the Bank of Japan are both broadly expected to hold rates steady later this week.

Gold prices have gained about 51 percent this year, reaching an all-time peak of US$4,381.21 on October 20, bolstered by geopolitical and economic uncertainties, rate-cut bets and sustained central bank buying.

Gold's winning streak is seen extending into next year, with analysts forecasting an annual average price above US$4,000 per ounce for the first time as economic and geopolitical turmoil keep the metal's safe-haven allure intact, a Reuters poll showed.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.77 percent to 1,038.92 tons on Monday from 1,046.93 tons on Friday.

China's net gold imports via Hong Kong in September dropped 17.6 percent from levels seen in August, Hong Kong Census and Statistics Department data showed on Monday.

Elsewhere, spot silver fell 0.3 percent to US$46.74 per ounce, platinum slipped 1.2 percent to US$1,571.85 and palladium dipped 0.8 percent to US$1,391.15.

REUTERS