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Gold hits seven-month peak on Fed pause views, trade tensions

Anish Mondal

Gold edged up to a seven-month high on Tuesday, as the dollar weakened ahead of a two-day U.S. Federal Reserve meeting, which will likely keep interest rates steady, and on worries over a rise in Sino-U.S. trade tensions.

* Spot gold rose to its highest since June 14 at $1,304.53 in morning trade, and was up 0.1 percent at $1,304.42 per ounce by 0115 GMT. U.S. gold futures were steady at $1,302.80 per ounce.
* Investors are focusing on the Fed’s two-day policy meeting, starting later in the day, when the U.S. central bank is expected to leave interest rates unchanged.
* The Fed raised interest rates four times last year.
* Some U.S. central bank officials have said they will be patient in raising rates given the stalemate over global trade, the U.S. federal government shutdown, and waning business and consumer confidence.
* The interest rate futures market is pricing in no Fed hikes this year.
* Gold tends to rise on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
* The United States on Monday charged China’s Huawei Technologies Co Ltd, its chief financial officer and two affiliates with bank and wire fraud to violate sanctions against Iran in a case that has escalated tensions with Beijing.
* Investors fear the charges could complicate high-level trade talks set to begin on Wednesday where China’s Vice Premier Liu He will meet with U.S. Trade Representative Robert Lighthizer and others.
* The dollar index, a gauge of its value versus six major peers, was holding close to a two-week low.
* Global stock markets tumbled on Monday after Caterpillar and Nvidia Corp warned of weak Chinese demand while oil posted its biggest one-day drop in a month on expectations of growing U.S. crude supply. Asian shares fell on Tuesday.
* Lawmakers on Tuesday will debate and vote on British Prime Minister Theresa May’s next steps, after the overwhelming rejection of her Brexit plan earlier this month, and have been proposing amendments seeking to shape the future direction of Brexit.
* China’s net gold imports via main conduit Hong Kong in December halved from the previous month, data showed on Monday, as the world’s top gold consumer likely limited import quotas for its banks while demand for jewellery waned towards end-2018.
* Venezuelan opposition leader and self-declared president Juan Guaido has asked British authorities to stop Maduro gaining access to gold reserves held in the Bank of England, according to letters released by his party on Sunday.
* Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.73 percent to 815.64 tonnes on Monday from Friday.