US MIDDAY: gold dips slightly

Updated 15 Jan, 2021

Gold prices dipped slightly on Tuesday as investors booked profits following robust gains over the past weeks, while rising hopes of a trade deal between China and the United States lifted equities. However, increasing expectations the US Federal Reserve would proceed with an interest rate cut this year pressured the dollar, supporting bullion rates.Spot gold dipped slightly to $1,327.41 per ounce as of 1:33 p.m. EDT (1733 GMT). Prices had hit a 14-month high of $1,348.08 on June 7. US gold futures settled 0.1% higher at $1,328.50 per ounce. With fears easing that the United States would impose trade tariffs with Mexico, investors are now optimistic that US President Donald Trump could shelve threats to impose more tariffs on China as well. He is expected to meet with President Xi Jingping at a Group of 20 summit on June 28-29."People think there is going to be a sort-of resolution at the end of this month with tariffs when President Trump meets with Xi," said Michael Matousek, head trader at US Global Investors, adding that strong gains last week prompted some profit booking. The trade dispute between Beijing and Washington has toppled markets since its inception more than a year ago and raised concerns of a global economic slowdown, prompting central banks around the world to keep a hold on interest rates."The rhetoric around Fed rates cut is weakening the dollar, which will help drive gold," Matousek said. Lower interest rates reduce the opportunity cost of holding nonyielding bullion and weigh on the dollar. Investors now see the US Federal Reserve cutting rates as well, with Fed fund futures now pricing in more than two 25-basis point rate cuts by year-end.Other precious metals did not resonate with bullion's move, with silver up 0.6% at $14.75 per ounce and platinum gaining nearly 1% to $809.50 per ounce. Among other precious metals, palladium extended gains for a fourth straight session, climbing 0.9% to a six-week high at $1,395.01 per ounce.

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