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Gold to post 3rd weekly gain on trade, growth fears

Gold to post 3rd weekly gain on trade, growth fears

Mubasher: Gold prices fell on Friday, but they were on course to record their third weekly gain in a row, as safe-haven demand remained supported by fears a global economic downturn and uncertainty on the China-US trade row, Reuters reported.

By 8:10 am GMT, spot gold dropped by 0.64% to $1,513.52 per ounce, but it was roughly 1.5% higher until now this week, following two weeks of gains, while US gold futures fell by 0.47% to $1,524 per ounce.

“The important consideration is that none of the headwinds have gone away; the tariffs got delayed a bit, but the underlying trade war remains and lower yields are supportive for gold," DailyFx senior currency strategist Ilya Spivak was quoted by Reuters.

On the trade front, US President Donald Trump believed that Beijing wanted to clinch a trade deal and the dispute would be fairly short.

However, China renewed its vow to take countermeasures against the latest tariffs on $300 billion worth of Chinese imports, but also struck an optimistic tone hoping to reach an acceptable solution “through equal-footed dialogue and consultation with mutual respect.”

A lack of clarity on the Sino-US trade ties, investors have hedged against a global slowdown by fleeing to safe-haven assets like gold, Japanese yen (JPY) and US Treasuries.

Earlier in the week, US 10-year Treasury bond yields fell below their 2-year counterparts for the first time since 12 years ago.

Such curve inversion is historically known as a key indicator of looming recessions.

The yellow metal has climbed by 7.4% or over $100, since the beginning of this month, amid the intensifying trade tensions and a slew of negative economic figures worldwide.

“The yellow metal continues to benefit from safe-haven inflows, which should ensure that any pullbacks are limited ahead of the weekend,” a note by OANDA analyst Jeffrey Halley was quoted by the news agency.

Market focus would turn now to the Federal Reserve’s annual symposium next week, while expectations are for a one-in-three chance of 50 basis-point (bp) rate cut by the US central bank this September.