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Gold eases on Brexit deal, global growth concerns limit losses

Credit: REUTERS/NEIL HALL

Gold fell on Friday after the Brexit deal struck by Britain and the European Union, although losses were limited by weak economic data from the United States and China.

By Sumita Layek

Oct 18 (Reuters) - Gold fell on Friday after the Brexit deal struck by Britain and the European Union, although losses were limited by weak economic data from the United States and China.

Spot gold XAU= was down 0.2% to $1,488.78 an ounce at 1009 GMT. U.S. gold futures GCv1 fell 0.4% to $1,492.20.

The European Union backed a new Brexit deal with Britain on Thursday, more than three years after Britons voted in a referendum to leave the bloc.

"The focus is on Brexit. The risk of a no deal Brexit has dropped and overall the sentiment on the Brexit front has improved a lot, but now it's just the uncertainty of the vote," ABN Amro analyst Georgette Boele said.

Prime Minister Boris Johnson now faces a Brexit showdown with parliament on Saturday.

"If the Brexit deal goes through, there will be a bit of pressure on gold, because there are a few investors who bought gold on the Brexit story," Boele said.

Gold denominated in sterling XAUGBP=R hovered close to a near three-month low it hit on Thursday.

Meanwhile, China's third-quarter economic growth slowed more than expected and to its weakest pace in almost three decades.

This came after data from the U.S. showed retail sales falling for the first time in seven months in September, suggesting that manufacturing-led weakness could be spreading to the broader economy, while industrial output for last month also dipped.

"Economic data out of U.S. and China are in favour of further (monetary policy) easing that will be supportive for gold," said SP Angel analyst Sergey Raevskiy.

The underlying momentum in gold is still positive as "the stimulus from the central banks will still be in agenda, the economy struggles to pick up in the face of trade war, and there are geopolitical risks in (the) Middle East, Turkey, Syria and Brexit is not out of the way completely," he added.

The U.S. Federal Reserve is set to meet at the end of the month to decide on further interest rate cuts this year. FED/

ANZ Bank said it expects gold to be supported by elevated macroeconomic and geopolitical risks, with prices for under-supplied platinum group metals likely to push higher.

"The palladium market is still structurally tight, keeping prices resilient, with intermittent volatility."

Palladium XPD= rose 0.1% to $1,760.14 an ounce, a day after hitting a record high of $1,783.21. The autocatalyst metal was up 3.6% on the week and was en route to its best since the week ended Sept. 13.

Platinum XPT= was down 0.4% at $883.52 while silver XAG= fell 0.3% to $17.47.

(Reporting by Sumita Layek in Bengaluru; Editing by Alexander Smith)

((Sumita.Layek@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 8067491638; Reuters Messaging: Sumita.Layek.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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