Gold appeal ahead of G20

(Reuters) – Gold prices moved in a narrow range on Friday as investors were cautious ahead of a G20 summit next week where leaders of the United States and China are set to discuss their trade dispute.

There will be a strong focus on the upcoming G20 summit to gauge the level of trade tensions between the United States and China. Any ratcheting up would favour gold,” said John Sharma, an economist with National Australia Bank (NAB).

The United States is set to raise its tariffs to 25 percent on $200 billion of Chinese imports on Jan. 1 from 10 percent currently. Trump has also threatened to impose tariffs on all Chinese imports unless U.S. demands are addressed.

Gold is often used by investors as an insurance against political and financial uncertainty.

“Investors are stepping in to hedge some of the possible tail risk from the G20 meeting next week,” said Stephen Innes, APAC trading head at OANDA in Singapore, adding the weaker dollar and U.S. Federal Reserve’s rate outlook are also supporting gold prices.

The dollar index is drifting lower after reaching a 16-month high hit earlier this month as a potential global economic slowdown raised doubts about the pace of interest rate hikes by the U.S. Federal Reserve next year.

Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes