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Gold Rebounds as China Deal Doubts Grow; Palladium Smashes Record

By Barani Krishnan - It seems difficult to keep down gold more than a day with the back-and-forth speculation of the success of the U.S.-China deal. More interestingly, it’s seems impossible to push down palladium, which hit record highs again Friday on supply concerns.

Gold futures for February delivery on New York’s COMEX settled up $3.10, or 0.6%, at $1,560.30 per ounce. For the week, it was flat.

Spot gold, which tracks live trades in bullion, was up $7.91, or 0.5%, at $1,560.45. For the week, it was down 0.1%.

Gold prices initially fell after China agreed to purchase at least $200 billion worth of U.S. goods over the next two years under the phase one deal signed on Wednesday between Chinese Vice Premier Liu He and U.S. President Donald Trump.

But as the days progressed, analysts have questioned the potential success of the deal and the chances of the trade war recurring with both nations keeping much of the tariffs they had imposed on each other prior to the agreement.

“Following a noteworthy positioning squeeze, the yellow metal is creeping higher once again,” TD Securities said in a note. “Along with positive expectations for growth comes the potential for inflation to creep higher, and without a commensurate Fed response, this would translate into lower real rates.”

The Federal Reserve cut rates by a quarter percent point for three months back to back in 2019, before bringing that easing cycle to a halt in December. With U.S. economic data mostly upbeat now, analysts do not expect the central bank to embark on a new round of cuts unless the trade war recurs.

Spot palladium jumped a whopping $177, or 7.7%, to $2,490 per ounce. It earlier hit an all-time high of $2,539.31.

Palladium futures were up up $77.45, or 3.6%, at $2,255.25, after touching a record high of $2,298.35.

Palladium led gains across commodities in 2019, with a 55% gain. It is up more than 28% year to date.

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