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Gold edges down as trade progress supports riskier assets

Gold edged lower in range-bound trade on Friday, pressured by increased risk appetite on hopes of an interim Sino-US deal being signed soon, while investors awaited US GDP data for fresh cues on the state of economy.

US Treasury Secretary Steven Mnuchin said on Thursday the United States and China would sign their so-called Phase one trade pact at the beginning of January, adding that it would not be subject to any renegotiation.

Spot gold fell 0.1 per cent to $1,477.95 per ounce by 0808 GMT. US gold futures were down 0.2 per cent to $1,481.90 per ounce.

“The real driver for gold markets has been trade-war risk and with its de-escalation in phase one on the back of Mnuchin’s comments is not bullish for gold,” said Stephen Innes, a market strategist at AxiTrader.

China’s finance ministry unveiled a new list of import tariff exemptions for a duration of one year starting Dec. 26 for six chemical and oil products from the United States.

The easing of the trade dispute boosted share markets, with Asian stocks holding close to 18-month peaks.

The dollar was steady, even as it was set to gain for the first week in four, supported by better-than-expected US economic data.

The initial US jobless claims report was strong with applications for unemployment benefits slipping from a more than two-year high.

Investors now await US gross domestic product data due out later on Friday.

“Gold is consolidating at the top of its recent range with the dollar a bit stronger and a positive risk environment,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Doesn’t look like anyone wants to take the market higher, the market seems really well-balanced at these levels for now.”

Meanwhile, in Britain, Prime Minister Boris Johnson promised to “get the Brexit vote wrapped up for Christmas”, following his landslide election victory.

“Key factors to watch for gold next year will be the second phase of the US-China trade negotiations, the US election, global monetary policy, and the investor response to these developments,” Standard Chartered Bank analyst Suki Cooper said in a note.

Elsewhere, palladium rose 0.4 per cent to $1,943.21 per ounce and was on track for a fifth straight week of gains.

Prices of the autocatalyst metal had hit an all-time peak of $1,998.43 on Tuesday on a sustained supply crunch.

Silver was flat at $17.06 per ounce, while platinum fell 0.2 per cent to $931.91.

Source: Economic Times