Gold firms as tariff deadline looms, eyes Fed outlook

By Karthika Suresh Namboothiri
FILE PHOTO: Gold bars are displayed in the Austrian Gold and Silver Separating Plant Oegussa in Vienna

By Karthika Suresh Namboothiri

(Reuters) - Gold rose on Wednesday as a deadline for an additional round of U.S. tariffs on Chinese imports loomed with no phase-one deal in sight, while palladium again soared to a record on supply woes.

Markets also held positions ahead of a U.S. central bank policy meeting, where it could provide an outlook for 2020.

Spot gold gained 0.2% to $1,466.83 per ounce as of 10:06 a.m. ET (1506 GMT), extending gains into a third straight session.

U.S. gold futures inched 0.2% higher to $1,471.50.

U.S. President Donald Trump has only days to decide whether to impose tariffs on nearly $160 billion in Chinese goods, a move that would exacerbate the 17-month long trade war.

Top economic and trade advisers from the White House are expected to meet in coming days with Trump over the decision, a source told Reuters, though a final decision has not been made.

"Gold has been up because of the uncertainty of the trade talks, along with the FOMC meeting this afternoon," said Bob Haberkorn, senior market strategist at RJO Futures.

In announcement after its policy meeting, due at 1900 GMT, the Fed is widely expected to hold rates steady, with investors watching for changes to its view on the economy and its 2% growth forecast for next year.

Better than expected U.S. consumer prices in November, supported the Fed's intention not to cut interest rates again.

The European Central Bank is also expected to keep rates steady at a meeting on Thursday.

"The global economy appears to have stabilized after a year of growth uncertainty. If yields on U.S. 10 (Treasury) yields rise above 1.90%, we think that will signal the end of gold’s rally and push prices below $1,400/oz," analysts at OCBC bank said in a note.

Palladium rose 0.6% to $1,907.70 an ounce, scaling a fresh peak of $1,911.50, on concerns that stagnating supply of the autocatalyst metal may fail to meet demand.

Adding fuel to supply concerns, prices zoomed past the key $1,900 level on Tuesday after mines across South Africa began shutting down after flash flooding triggered the most severe power blackouts in more than a decade.

Palladium was on track for a 14th straight session of gains.

Platinum jumped 0.8% on Wednesday, having hit a one-month high of $930.

South Africa is a major producer of palladium and also has the biggest and most lucrative platinum reserves.

Meanwhile, spot silver inched 0.1% higher to $16.67 an ounce.

(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Steve Orlofsky)