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PRECIOUS-Gold hits eight-month peak on U.S.-China trade woes; focus on Fed

Published 2019-01-29, 02:05 p/m
© Reuters.  PRECIOUS-Gold hits eight-month peak on U.S.-China trade woes; focus on Fed
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* SPDR Gold holdings rise to highest since June

* Silver price hits highest since July 2018

* Charges against China's Huawei exec add to uncertainty on trade (Updates prices)

By Arijit Bose

Jan 29 (Reuters) - Gold jumped to its highest in more than eight-months on Tuesday, on doubts surrounding U.S.-China trade relations and ahead of a Federal Reserve meeting with increasing expectations for a pause to the central bank's rate hike trajectory.

Spot gold XAU= was up 0.5 percent to $1,310.49 per ounce as of 1:44 p.m. EST (1844 GMT), having hit its highest since May 15 at $1,311.67 in the session.

U.S. gold futures GCcv1 settled up 0.4 percent at $1,308.90 per ounce.

"The main catalysts for gold prices moving up today is an expected fallout in the (U.S.-China) trade war," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

"There are also questions as to whether the economy is slowing, with a lot of indications that it is, and the trade war with China could escalate over the situation with Huawei."

The United States issued criminal charges against Chinese firm Huawei and its chief financial officer. Chinese Foreign Ministry spokesman Geng Shuang hit back at the United States asking it to end "unreasonable suppression" of Chinese companies. fear the charges could complicate high-level U.S.-China trade talks set to begin on Wednesday. adding to the mix are growing concerns over global growth after profit warnings from Caterpillar Inc (NYSE:CAT) CAT.N and Nvidia Corp NVDA.O on Monday, soon after European Central Bank President Mario Draghi reiterated worries about the economy. MKTS/GLOB impetus for gold came from expectations that the Fed will terminate its rate-hiking cycle. Fed policy makers are expected to release a policy statement on Wednesday at 2 p.m. ET (1900 GMT), followed by a press conference from Fed Chairman Jerome Powell.

Gold tends to rise on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

"There's plenty of reason to still look at gold as a means to have some protection" given expectations that other markets will continue to struggle, especially stocks, Saxo Bank analyst Ole Hansen said.

"The momentum in gold has been established now. We just need to work out how strongly the momentum has been backed by speculative interest."

The metal has risen over 13 percent from a more than 1-1/2-year low touched in August last year, mostly due to volatile stock markets and a softer dollar.

Holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose 0.73 percent to 815.64 tonnes on Monday, their highest since June 2018. GOL/ETF

Silver XAG= rose 0.6 percent to $15.84 per ounce, having hit its highest since July 2018 at $15.92.

Palladium XPD= rose 0.8 percent to $1,341.50, while platinum XPT= was down 0.1 percent at $808.50.

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