Gold edges higher on trade war fears

Business | Agencies and Stella Zhai 8 Oct 2019

Gold prices ticked up as investors became cautious following a report that Beijing would likely disagree with a broad trade deal with the United States.

Oil, too, was higher.

The next round of US-China trade talks are set to be held in Washington on October 10-11, although hopes of progress diminished after a report that Chinese officials wanted the scope of this week's negotiations to be narrow.

Spot gold once inched over 0.3 percent higher to US$1,509.28 (HK$11,840) per ounce yesterday.

Prices had firmed 0.5 percent last week on fears of cooling global growth.

Meanwhile, China has added more than 100 tons of gold to its reserves since it resumed buying in December, reinforcing its position as one of the major official accumulators as central banks stock up.

The People's Bank of China picked up more gold last month, raising holdings to 62.64 million ounces in September from 62.45 million in August, according to data on its website.

In tonnage terms, the latest inflow totals 5.9 tons and follows the addition of about 99.8 tons over the prior nine months.

Bullion hit the highest in more than six years in September as slower growth, the trade war and rate cuts spurred investor demand.

Central banks have been major buyers too, especially in emerging markets.

Official purchases will likely continue as protectionist policies and geopolitical concerns add to demand, according to Suki Cooper, a precious metals analyst at Standard Chartered Bank.

Oil prices meanwhile climbed up buoyed by hopes for progress in the trade talks and supported by challenges to supply facing major exporters.

Brent crude rose 48 cents or 0.8 percent to US$58.85 a barrel as of 8 pm yesterday, while US West Texas Intermediate crude was at US$53.39, up 58 cents or 1.1 percent.

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