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Gold gains as weak China data weighs on risk appetite

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Gold prices inched up on Thursday as

Asian equities turned lower after weaker-than-expected economic

data out of China weighed on risk appetite, boosting demand for

safe-haven assets.

Spot gold was up 0.1% at $1,464.31 per ounce, as of

0401 GMT, while U.S. gold futures rose 0.1 % to $1,464.80

per ounce.

Asian stocks fell after China’s industrial output grew

significantly slower than expected in October, as weakness in

global and domestic demand and the drawn-out Sino-U.S. trade war

weighed on activity in the world’s second-largest economy.

“Gold is being supported as the Chinese industrial

production and retail sales came way below expectations,” OANDA

analyst Jeffrey Halley said.

“Another deterioration in Hong Kong this week will further

support gold, but it’s really all about this ongoing trade

talks, which is becoming like a broken record.”

Dialling up the trade rhetoric, U.S. President Donald Trump

on Wednesday threatened to ramp up tariffs on Chinese goods if

the countries failed to reach a deal on trade.

That came after media said the U.S.-China trade negotiations

had ‘hit a snag’ over farm purchases, with China not wanting a

deal that looked one-sided in favor of the United States.

U.S. Federal Reserve Chair Jerome Powell on Wednesday told

the Joint Economic Committee that negative interest rates sought

by Trump are not appropriate for the U.S. economy right now.

He also added that the central bank would probably stop

(with interest rate cuts) where it is unless there is a

“material” change in the economic outlook.

“Investors are stuck with rising trade tensions with Trump

threatening additional tariffs again, but what’s weighing on

gold is the hawkish stance from the Fed overnight, saying rate

cuts are on hold for now,” ANZ analyst Daniel Hynes said.

“In the long term, the backdrop is pretty conducive. With

the global central banks being accommodative, gold will get its


The Fed has cut interest rates thrice this year to help

sustain U.S. growth. A lower interest rate reduces the

opportunity cost for holding the non-yielding bullion.

Holdings of the world’s largest gold-backed exchange-traded

fund, SPDR Gold Trust fell 0.04% to 896.77 tonnes on


Elsewhere, palladium climbed 0.4% to $1,716.63 per

ounce. Silver was down 0.1% at $16.95 per ounce and

platinum dipped 0.1% to $872.90 per ounce.

(Reporting by Sumita Layek and Diptendu Lahiri in Bengaluru,

Editing by Sherry Jacob-Phillips)

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