By Barani Krishnan
Investing.com - Gold is at an inflection point as traders muse over what's more important to the market -- a U.S.-China trade deal that could knock bullion off its $1,300 perch or a spike in Brexit/Venezulea worries that may result in new 2019 highs.
The spot price of bullion and futures of gold hit two-week highs on Friday as a string of weak economic data from earlier in the week and subdued inflation supported the Federal Reserve’s stance of being “patient” with future rate hikes.
But percentage-wise, the advance was at the same incremental pace seen through earlier in the week as market participants awaited the major news development that could be a leader for the market.
"Gold continues to ignore strong equities and the dollar to chart its own path," said George Gero, precious metals analyst at RBC Wealth Management in New York.
"The problem is the various conflicting interests in that path, i.e. a trade war resolution that would reduce the need for a hedge, versus a potential flare up in Brexit/Venezuela that might drive more investors toward gold."
Spot gold, reflective of trades in physical bullion, rose by $9.46, or 0.7%, to $1,321.95 per ounce by 3:25 PM ET (20:25 GMT).
In futures trading, gold's benchmark April contract on the Comex division of the New York Mercantile Exchange settled up $8.20, or 0.6%, at $1,322.10. The contract hit a session peak of $1,325.25, its highest level since Feb. 1, and inching toward the 2019 high of $1,331.10.
Gold prices have risen more than 12% since touching more than 1-1/2-year lows in mid-August, mostly on expectations of a pause in Fed rate hikes. But gold's run-up has lost steam since last month when the spot price peaked at $1,365.61.
Stocks on Wall Street, which act as a contrarian trade to gold, surged on Friday as negotiators on both sides of the U.S.-China trade talks reported good progress in Beijing, saying negotiations would continue in Washington next week.
Equity markets have been on an uptrend since a Bloomberg report on Thursday that President Donald Trump was considering a 60-day extension to the March 1 deadline requiring China to reach a trade deal. Presidential economic adviser Larry Kudlow said, however, said the president has not decided yet on the extension.
On the Brexit side, Prime Minister Theresa May is sticking to her strategy of pulling Britain out of the EU, despite her party fighting in the wake of her latest House of Commons defeat. May plans to return to Brussels "within days" to push her agenda after her Brexit secretary Steve Barclay met EU ambassadors in London on Friday.
On the Venezuelan end, Reuters reported out of Geneva that global commodities firm Trafigura has decided to stop trading oil with Venezuela due to U.S. sanctions on the OPEC nation's energy sector.
The decision will come as a blow to the Nicholas Maduro administration, which has been trying to maintain its hold on Caracas and its state oil company PDVSA despite U.S. and widespread global opposition to its rule. Swiss-based Trafigura had a long-standing arrangement with PDVSA to take Venezuelan crude and, in exchange, supply the Latin American country with refined products.
Palladium remained the world's most valuable traded metal, with itsspot price trading up $16.20, or 1.1%, at 1,436.55 per ounce by 3:23 PM ET (20:23 GMT), after reaching a peak of $1,438.75 earlier.
Trades in other Comex metals as of 3:23 PM ET (20:23 GMT):
Palladium futures up $22.10, or 1.6%, at $1,408 per ounce.
Silver futures up 24 cents, or 1.6%, at $15.77 per ounce.
Platinum futures up $19.60, or 2.5%, at $808.80 per ounce.
Copper futures up 4.3 cents, or 1.6%, at $2.82 per pound.