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PRECIOUS-Gold treads water as focus shifts to Sino-U.S. talks, Fed minutes

Published 2019-10-07, 11:27 a/m
© Reuters.  PRECIOUS-Gold treads water as focus shifts to Sino-U.S. talks, Fed minutes
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* U.S. Fed minutes due on Wednesday

* Trade talks scheduled in Washington on Oct. 10-11

* Specs slash bullish bets on COMEX gold -CFTC (Adds comments, updates prices)

By Asha Sistla

Oct 7 (Reuters) - Gold prices inched lower on Monday, but held a tight range around the $1,500 level as investors took a cautious approach ahead of the U.S. Federal Reserve minutes and trade talks between Washington and Beijing this week.

Spot gold XAU fell 0.2% to $1,501.12 per ounce at 11:08 a.m. EDT (1508 GMT). Prices firmed 0.5% last week on concerns of slowing global growth.

U.S. gold futures GCcv1 fell 0.4% to $1,506.80 per ounce.

"Last week was getting fairly bullish for gold with the ISM and non-manufacturing numbers, but the jobs number was not terrible and that sort of dampened the bullishness in gold," said Ryan McKay, a commodity strategist at TD Securities.

"We also have the trade talks scheduled later this week ... unlikely anyone is going to take substantial bets in the days prior to the outcome of those meetings and all that's interpreting into a range-bound action for gold here."

The White House confirmed U.S.-China trade negotiations are set to begin on Thursday in Washington, although news reports suggest Beijing may be looking to restrict the scope of any deal. Fed Open Market Committee's minutes from its September meeting are due on Wednesday.

A string of weak U.S. economic data comprising of dim manufacturing activity and a sharp slowdown in services industry growth heightened recession fears in the economy, although Friday's decent jobs report halted bullion's upside. slashed their bullish positions in COMEX gold and trimmed bullish bets on silver contracts in the week to Oct. 1, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. CFTC/

"Gold continues to get appraised against the U.S. bond yields and what the Federal Reserve is going to do next," said AxiTrader market strategist Stephen Innes in a note.

"So, while price action seems supportive enough to suggest a long bias remains intact, ... market participants likely need further evidence from the Fed Board that they are shifting to an easing bias to push prices significantly higher."

Lower interest rates tend to increase investor interest in non-yielding bullion.

"U.S. data has just started to weaken and it will continue to weaken as we move into 2020 and ultimately that will raise some questions for equity markets and increase volatility there, and we could see further allocations into gold," TD Securities' McKay said.

Elsewhere, platinum XPT= rose 0.9% to $884.31, while silver XAG= shed 0.1% to $17.53 and palladium XPD= fell 0.4% to $1,658.49.

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