US Markets

Gold perks up ahead of Fed minutes despite trade optimism

Credit: REUTERS/NEIL HALL

Gold eked out gains on bets for further rate cuts by the U.S. Federal Reserve as investors awaited minutes from the central bank's September meeting on Wednesday, but hopes of a Sino-U.S. trade deal buoyed risk sentiment and capped bullion's gains.

By Swati Verma

Oct 9 (Reuters) - Gold eked out gains on bets for further rate cuts by the U.S. Federal Reserve as investors awaited minutes from the central bank's September meeting on Wednesday, but hopes of a Sino-U.S. trade deal buoyed risk sentiment and capped bullion's gains.

Spot gold XAU= was up 0.2% at $1,508.50 per ounce by 10:50 a.m. EDT (1450 GMT). U.S. gold futures GCcv1 rose 0.7% to $1,514.10 per ounce.

"The fact is the Fed is adding significant amount of liquidity to the market and they're increasing money supply and that's why gold is firmer," said David Meger, director of metals trading at High Ridge Futures.

Fed Chairman Jerome Powell on Tuesday flagged openness to further rate cuts to fend off global economic risks and said the Fed would "soon announce measures to add to the supply of reserves over time."

The U.S. Treasury yield curve steepened after Powell's comments on Tuesday.

The minutes of the Fed's September meeting are due at 2 p.m. EDT (1800 GMT).

U.S. stocks opened higher for the first time in three sessions as media reports raised hopes of progress in trade talks between the United States and China. .N

High-level talks involving Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are planned on Thursday and Friday.

"We do have some light optimism on the trade front. However, when everybody steps away, they realise that the real chances of a trade deal, even partial, are small at best," High Ridge Futures' Meger said.

A Bloomberg report on Wednesday said China was still open to agreeing to a partial trade deal with the United States, citing an official with direct knowledge of the talks.

On the Brexit front, in another sign that the deal between Britain and the European Union was close to breaking down ahead of an Oct. 31 departure deadline, EU officials denied on Wednesday that Brussels was preparing a major concession to Britain to secure a deal.

Also on the radar were other geopolitical developments, with Turkey launching a military operation against Kurdish fighters in northeast Syria on Wednesday.

"There are lingering geopolitical matters that have many traders and investors looking to the safe-haven metals as an investment," Jim Wyckoff, senior analyst with Kitco Metals, wrote in a note.

Elsewhere, silver XAG= rose 0.4% to $17.78 an ounce, while platinum XPT= fell 0.3% to $886.70. Palladium XPD= gained 0.4% to $1,682.21 an ounce.

(Reporting by Swati Verma in Bengaluru Editing by Matthew Lewis)

((Swati.Verma@thomsonreuters.com; within U.S. +1 646 223 8780 , outside U.S. +91 80 6749 6356/1298 ; Reuters Messaging: swati.verma.thomsonreuters.com@reuters.net))

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