Gold holds steady on Fed interest rate hike uncertainty

Gold prices held recent gains in early Asian trade on Friday on lingering doubts over the pace of rate hikes by the US Federal Reserve, putting the metal on track for a second straight weekly gain.

Fundamentals

Spot gold was steady at $1,226.38 per ounce at 0104 GMT. The metal was ahead for a second straight week, up around 0.4 per cent after a 1 per cent gain last week.

US gold futures were little changed at $1,226.9 per ounce.

The Fed is widely expected to impose its fourth rate hike of 2018 in December, but investors have concerns over how many rate hikes the central bank can implement next year without risking a slowdown in the domestic economy.

China rejected fresh US accusations of perpetuating “unfair” trade practices and urged Washington on Thursday to stop making provocations, showing little sign of backing down days ahead of the G20 summit.

US-China trade tensions are likely to dominate the summit of the world’s 20 biggest economies next week, according to a senior European Union official who said the EU was keen to act as a bridge-builder.

Britain and the EU have agreed a draft text setting out a close post-Brexit relationship, though wrangling with Spain over control of Gibraltar must still be settled before EU leaders meet on Sunday in order to rubber-stamp the pact.

The Bank of England would probably need to raise interest rates faster than investors expect if Britain manages a smooth exit from the EU, though Brexit’s implications for the BoE remain unclear, rate-setter Michael Saunders said.

Italy said it would resist pressure from Brussels to revise its big-spending budget, effectively daring EU authorities to punish it with fines ahead of May’s European parliamentary elections.

Physical gold demand in India was robust this week as consumers stepped up purchases during the traditional wedding season after domestic rates slipped to a near six-week trough, while gains in global prices weighed on bullion’s appeal in other Asian hubs.

Canada’s Centerra Gold has promised Kygyzstan’s government that it will produce at least 15.5 tonnes of gold at the giant Kumtor mine this year, the Kyrgyz prime minister’s press service said on Thursday.

Sudan signed an agreement with a state-owned Turkish company on Thursday allowing it to mine for gold and other minerals in Sudan’s Red Sea state, a source at the Sudanese petroleum ministry said.

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