PRECIOUS-Gold tepid on trade respite, set for biggest weekly fall in 2-1/2 yrs
By Sumita Layek
Nov 8 (Reuters) - Gold prices were tepid on Friday, after dropping up to 2% in the previous session, as hopes of headway in the Sino-U.S. trade deal boosted risk-on sentiment, denting the bullion's appeal.
World stocks rallied and the dollar index .DXY gained after officials on Thursday said that China and the United States have agreed to roll back tariffs on each others' goods as part of the first phase of a trade deal. MKTS/GLOBUSD/
Spot gold XAU= was trading at 1,468.51 per ounce, as of 0335 GMT, poised for its biggest weekly drop since May 2017. In the previous session, prices dropped to their lowest in more than a month.
U.S. gold futures GCv1 were up 0.2% at $1,469.80 per ounce.
"The market is coming to terms with the move that marked the breakout of the fairly long-standing range and finally gold seems to have made a move lower," said Ilya Spivak, a senior currency strategist at DailyFx.
However, the 'phase one' trade deal faced fierce internal opposition at the White House over concerns whether rolling back tariffs will give away U.S. leverage in the negotiations.
"The market has a lot of questions about this, and that's why ... even though there was a selloff, gold did not break below the lows in August," Spivak said.
"If there isn't any clarity, we will get a sideways range, if we get a clear 'no' - as all of the previous talks just ended in more tariffs, a lot of promises of a deal that came to nothing - gold will go higher. If the deal does look solid and there is a de-escalation, then gold will head lower."
Gold prices have risen about 14% so far this year mainly due to the protracted trade war that spurred global economic slowdown fears.
Reflecting sentiment, holdings in the world's largest gold-backed exchange-traded fund SPDR Gold Trust GLD dipped 0.16% on Thursday.
"Given the positivity that is reflected in equities and rates markets, the acknowledgement that things could just as easily take a turn for the worse appears to be expressed through gold positions at the moment," UBS said in a note.
"This raises the risk that further improvements towards a credible and comprehensive trade deal would trigger substantial unwinding in the gold market."
Elsewhere, silver XAG= dropped 0.5% to $17.03 per ounce, and was set to fall about 6% for the week - its steepest since July 2017.
Platinum XPT= fell 0.3% to $906.06 per ounce, poised for a more than 4% drop for the week. Palladium XPD= lost 0.2% to $1,797.87, and was headed for its worst week in five.
(Reporting by Sumita Layek and Diptendu Lahiri in Bengaluru; Editing by Uttaresh.V and Sherry Jacob-Phillips)
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