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PRECIOUS-Gold dips as trade deal signing nears, palladium hits record high
Published at 14/01/2020 at 19:09

(Updates prices)

* Palladium hits record high of $2,191.60

* Silver drops to lowest since late December

* HSBC sees heavy structural supply/demand deficits for palladium

By Harshith Aranya

Jan 14 (Reuters) - Gold fell on Tuesday ahead of the much awaited signing of an interim U.S.-China trade deal that dampened the appeal of bullion, while palladium notched a record high on a sustained supply deficit.

Spot gold dipped 0.1% to $1,546.48 an ounce by 1:44 p.m. EST (1844 GMT) after touching the lowest since Jan. 3 at $1,535.63. U.S. gold futures settled down 0.4% at $1,544.60.

"The main thing is that a week ago we had the Iran-U.S. news, that caused a pretty significant rally in gold; and now that news has subsided," said Bob Haberkorn, senior market strategist at RJO Futures.

"The U.S.-China deal is also supposed to get signed tomorrow. So, the fact that two big drivers for gold in the geo-political front have kind of come and gone, so gold sold off here."

Bullion rose to its highest in nearly seven years last week on worries over a potential U.S.-Iran military conflict, but the rally faded in the absence of any escalation in tensions.

Analysts said investors are still taking profits after the massive spike in prices.

"That has also been noted in the exchange-traded funds market, where there have been some quite sizeable reductions since we reached that high," Saxo Bank's Ole Hansen said.

Signaling a further ramp down in trade tensions, the U.S. Treasury on Monday dropped China's designation as a currency manipulator, fuelling market optimism.

Global equities markets stalled near record highs ahead of the signing of the trade deal.

U.S. consumer prices rose slightly less than expected in December and monthly underlying inflation pressures retreated, which could allow the U.S. central bank to keep interest rates unchanged at least through 2020.

Also on investors' radar is the Federal Reserve's Beige Book, a summary of commentary on economic conditions, due on Wednesday.

Palladium hit a record high of $2,191.60 an ounce, and was on track for a ninth straight session of gains. The auto-catalyst was up 2.7% at $2,189.77.

For 2020/21, "we forecast heavy structural supply/demand deficits for palladium," James Steel, chief precious metals analyst at HSBC, wrote in a note.

"Likely robust automotive demand will help keep the market tight. Tighter emissions regulations globally imply heavier palladium auto catalyst loadings."

Silver was down 1% at $17.78 after hitting its lowest since Dec. 24 at $17.64, while platinum rose 0.9% to $982.26.

(Reporting by Harshith Aranya and K. Sathya Narayanan in Bengaluru Editing by Marguerita Choy and Richard Chang)

((harshith.aranya@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6462; Reuters Messaging: harshith.aranya.thomsonreuters.com@reuters.net))