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Gold dips but recession fears keep prices at six-year high

Published 2019-09-04, 04:09 a/m
© Reuters.  Gold dips but recession fears keep prices at six-year high
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* Spot gold faces resistance at $1,546/oz -technicals

* Holdings of SPDR Gold Trust rise 1.34%

* Silver hits highest since September 2016

By Eileen Soreng

Sept 4 (Reuters) - Gold eased on Wednesday as traders locked in gains after a 1% rise in the previous session, but prices stayed near multi-year highs on heightened fears of a global recession, as well as uncertainties around the Sino-U.S. trade spat and Brexit.

Spot gold XAU= fell 0.6% to $1,537.20 per ounce at 0728 GMT, but hovered near last week's $1,554.56, its highest since April 2013.

U.S. gold futures GCv1 were also down 0.6% at $1,546.6 an ounce.

Spot silver XAG= was up 0.5% at $19.33 per ounce, after hitting $19.57 earlier, its highest since September 2016.

U.S. manufacturing activity contracted for the first time in three years in August, data showed on Tuesday, renewing fears of a sharp economic slowdown and weighing on risk sentiment. weak data has the increased the possibility of interest rate cut in September, said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers, adding trade uncertainties will create buying momentum in gold and silver.

Traders have almost fully priced in a 25 basis point interest rate cut at the Federal Reserve's meeting later this month, according to CME's FedWatch tool FEDWATCH .

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar. The dollar index .DXY was down 0.2% against a basket of currencies. USD/

Since prices have rallied so sharply, there might be profit booking to the levels of $1,510-$1,515, Trivedi said.

Meanwhile, stock markets in Asia and Europe gained on the back of strong Chinese services sector growth and a report that indicated possible resolution to the Hong Kong protests. MKTS/GLOB

On the trade front, U.S. President Donald Trump's threatened on Tuesday that he would be "tougher" on Beijing in the second term if talks dragged on. lawmakers defeated Boris Johnson in parliament on Tuesday in a bid to prevent him taking the country out of the EU without a divorce agreement, prompting the prime minister to announce that he would immediately push for a snap election. no agreement on the U.S.-China trade front, investors remain nervous, said Michael McCarthy, chief market strategist at CMC Markets, adding that uncertainties following the UK parliamentary vote are a positive for gold.

Spot gold faces a resistance at $1,546 per ounce, a break above which could lead to a gain into the range of $1,568-$1,595, according to Reuters technical analyst Wang Tao. of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose 1.34% to 890.04 tonnes on Tuesday, their highest since November 2016. spot platinum XPT= rose 0.6% to $963.15 per ounce and palladium XPD= was down 0.1% at $1,540.25.

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