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Gold Gains On U.S.-China Trade Jitters, Rate Cut Hopes

Kitco News

July 12 (Reuters) - Gold prices rose on Friday and were on track for a weekly gain, as worries over renewed U.S.-China trade tensions and expectations of a rate cut by the Federal Reserve boosted demand for the safe-haven metal.

FUNDAMENTALS

* Spot gold was up 0.4% at $1,408.62 per ounce as of 0133 GMT. Gold has risen nearly 0.6% so far this week.

* U.S. gold futures were up 0.2% at $1,410 an ounce.

* U.S. President Donald Trump said on Thursday that China was not living up to promises it made on buying agricultural products from American farmers.

* Fed Chair Jerome Powell indicated on Thursday that a rate cut is likely at the Fed’s next meeting as businesses slow investment due to trade disputes and a global growth slowdown.

* Asian shares pulled back on Friday as Sino-U.S. trade tensions weighed on sentiment ahead of the release of June trade data from China.

* Later on Friday, China will release trade data for June, with analysts expecting exports to have fallen as weakening global demand and a sharp hike in U.S. tariffs took a heavier toll on the world’s largest trading nation.

* Meanwhile, the dollar index steadied on Friday after falling to near one-week low in the previous session, regaining some traction against its peers on stronger U.S. inflation data.

* U.S. core consumer price based inflation in June increased the most in nearly 1-1/2 years.

* The signs of a pick-up in underlying inflation, along with separate data on weekly jobless claims showing the labour market remained solid, curbed financial market expectations of a more aggressive 50 basis point cut at the Fed’s July 30-31 meeting.

* However, markets are still fully priced for a quarter percentage point cut as U.S. policymakers seek to support a slowing economy.

DATA AHEAD (GMT)

* 0700 China Exports YY June

* 0700 China Imports YY June

* 0700 China Trade Balance USD June

* China M2 Money Supply YY June

Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich

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