A commemorative gold ornament for the upcoming Year of the Rat is on display at a jewellery shop on December 10 2019 in Suzhou, China. Picture: VCG VIA GETTY IMAGES/WANG JIANKANG
A commemorative gold ornament for the upcoming Year of the Rat is on display at a jewellery shop on December 10 2019 in Suzhou, China. Picture: VCG VIA GETTY IMAGES/WANG JIANKANG

Bengaluru — Gold was trading in a tight range on Tuesday ahead of a two-day rate-setting meeting by the US central bank, with investors awaiting clarity on whether a next round of US tariffs on Chinese goods will come into effect this weekend.

Spot gold was down 0.1% to $1,460.17 an ounce by 3.50am GMT. US gold futures were flat at $1,464.50.

“Both the events could be potential catalysts for gold, prices could go down if Fed is more hawkish biased. However, in case the US and China can’t reach any resolution and tariffs kick in, traders will move back to the safe-haven gold,” said Margaret Yang Yan, a market analyst at CMC Markets.

The US and China have adopted a reconciliatory tone, with China saying it hoped to make a deal as soon as possible. President Donald Trump has said he is working with Beijing on an agreement ahead of new tariffs on $156bn worth of Chinese imports on December 15.

“Given that we are tilting towards some sort of the deal being reached with the Chinese, we think gold and silver will struggle going into year-end and see a lower trading range for both over the next few weeks,” said Edward Meir at ED&F Man Capital Markets in a note.

The effect of a prolonged trade war on economic growth has led the US Federal Reserve to cut rates three times this year, sparking demand for the non-yielding bullion. Gold is now on track for its best year in almost a decade.

Most Fed policymakers have put emphasis on keeping the interest rates steady unless the economic outlook deteriorates. The Fed is widely expected keep interest rates on hold in the range of 1.50% to 1.75%.

In other precious metals, palladium rose 0.1% to $1,884.31 an ounce. Prices had climbed to a high of $1,898.50 in the previous session. The autocatalyst metal, used in vehicle exhausts to reduce harmful emissions, has risen more than 49% so far this year.

“The rally so far this year has been driven by tight supply, reflected in a persistent back in the forward curve and elevated lease rates,” Meir said. “We suspect that palladium has more room to run, with $2,000 looking to be the next logical resistance level.”

Silver fell 0.1% to $16.58 an ounce, while platinum gained 0.2% to $896.67.

Reuters