According to Mining News Pro - LONDON, Aug 28 (Reuters) - Gold edged higher on Tuesday,
helped by weakness in the dollar after a trade deal was struck
between the United States and Mexico but analysts said ongoing
U.S.-China tensions would continue to weigh.
The United States and Mexico agreed on Monday to overhaul
the North American Free Trade Agreement (NAFTA). The dollar was pinned at its lowest in nearly a month
against a basket of major currencies, while riskier assets such
as equities rose. A weaker U.S. currency generally boosts demand
for dollar-denominated commodities.
"The main trade dispute, meaning U.S.-China conflict, is
still going on so this NAFTA deal is just a small aspect," said
Commerzbank analyst Daniel Briesemann, adding that the effects
on gold markets would be limited.
Spot gold rose 0.2 percent to $1,213.11 an ounce by
1115 GMT after snapping a six-day losing streak in the previous
session and touching a two-week high.
U.S. gold futures for delivery in December were up
0.3 percent at $1,219.10.
The deal between the United States and Mexico pushed the
dollar lower against a basket of major currencies as investors
sought riskier assets and the greenback`s safe-haven appeal
declined.
In recent months investors have sought safety from the trade
disputes in U.S. Treasury bonds, which entails buying dollars.
Meanwhile, holdings of the largest gold-backed
exchange-traded fund (ETF), New York`s SPDR Gold Trust,
have firmed slightly after this month`s drop to their lowest
since January 2017 but are still down about 11 percent since
late April.
Net short positions in COMEX gold contracts increased for a
sixth straight week to a new record. "What will be important is whether we will we see a short
squeeze, which could push gold higher," said Commerzbank`s Briesemann.
Spot silver was up 0.6 percent at $14.94 while
platinum rose 1.2 percent to $808.60 after touching a
two-week high of $808.70.
Palladium was steady at $948, having touched $950.25
to match the 1-1/2 month high hit on Monday.
The NAFTA deal, which includes new rules for the car
industry, lifted platinum and palladium because of their use in
auto catalysts. But analysts say the fundamental impact of the
deal should be limited.
"Although Mexico is an important manufacturing hub for the
U.S. car industry, the deal does not change our outlook for the
U.S. car market," said Julius Baer commodities research analyst
Carsten Menke.
(Additional reporting by Nallur Sethuraman in Bengaluru
Editing by David Goodman)
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