Gold firms as stocks pause, trade uncertainty lingers
By Swati Verma
Nov 6 (Reuters) - Gold gained on Wednesday, recouping some losses after a nearly 2% decline in the previous session, as a rally in equities stalled and the outcome of U.S.-China trade talks looked uncertain again.
Spot gold XAU= rose 0.2% to $1,487.40 per ounce at 1044 GMT. U.S. gold futures GCcv1 were up 0.3% at $1,488.70.
"There is a bit of caution in the marketplace today. We still don't know if there is a (U.S.-China trade) deal yet. We need to wait-and-see whether there is going to be any confirmation regarding trade talks," said Afshin Nabavi, senior vice president at precious metals trader MKS SA.
There was also some short covering in the gold market after Tuesday's sharp decline, Nabavi said.
Gold, seen as a safe haven during times of economic uncertainty, dropped to a near three-week low of $1,479.25 an ounce in the previous session and registered its biggest one-day percentage drop since late September at 1.7%.
Hopes of a detente in the trade war boosted sentiment about the global economic outlook and pressured safe-haven assets like bullion and government bonds.
Investors now await new developments on the talks after reports that China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of a "phase one" trade deal.
"The risk-on scenario is a bit less after yesterday's over-reaction when gold was dancing on the support level of $1,480," said Carlo Alberto De Casa, ActivTrades' chief analyst.
Global stock markets steadied after a three-day rally as traders continued to watch incoming economic data and awaited fresh developments from U.S.-China trade talks. MKTS/GLOB
"(Trade talks) are unpredictable, as long as the deal is not complete and in paper it is closed, uncertainty is going to be there, because by now we have seen them starting talks and stopping mid way several times," said Ajay Kedia, director at Kedia Advisory in Mumbai.
The protracted trade dispute has raised fears of a global recession, helping the safe-haven bullion to rise more than 15% this year.
Gold prices remain closely correlated with U.S. yields and the recent uptick in yields may see downwards pressure remain on bullion over the near term, MKS PAMP analysts wrote in a note.
"Much like gold, silver slipped underneath the major psychological support level of $18 and tests toward support at $17.50."
Silver XAG= fell 0.1% to $17.57 per ounce, having touched its lowest since Oct. 24 earlier.
Platinum XPT= was down 0.3% at $926.27 per ounce. The metal hit a one-week low of $917.
Palladium XPD= gained 0.1% to $1,779.05.
(Reporting by Swati Verma and Sumita Layek in Bengaluru; Editing by Susan Fenton)
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