Gold holds near record high amid Trump policy risks

Gold held steady near its record high on Thursday as investors awaited further direction from the new Trump administration regarding potential tax cuts and trade policies.

FUNDAMENTALS

* Spot gold held its ground at $2,755.68 per ounce, as of 0043 GMT. Prices rose to $2,763.43 on Wednesday, their highest since Oct. 31 when they hit a record high of $2,790.15.

* U.S. gold futures shed 0.2% to $2,764.90.

* U.S. President Donald Trump said his administration was weighing imposing a 10% tariff on goods imported from China on Feb. 1. He also promised duties on European imports, without elaborating further. * He had earlier said Mexico and Canada could face levies of around 25% by Feb. 1.
* Gold’s appeal as an inflation hedge may decline if Trump’s policies that analysts see as inflationary prompt the Federal Reserve to keep interest rates higher for longer, as bullion is a non-yielding asset.
* The Fed is meeting next week against a backdrop of continued economic growth and declining inflation, but faces uncertainties from new administration policies.
* The central bank is expected to hold its benchmark interest rate steady at its next policy meeting on Jan. 28-29. Higher interest rates dampen the appeal of non-yielding gold.

* European Central Bank policymakers lined up behind further interest rate cuts on Wednesday, indicating that next week’s reduction is all but a done deal and further moves will also come even if the Fed remains cautious.

* According to Reuters technical analyst Wang Tao, gold might have to face resistance at $2,759, which could trigger a correction.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.26% to 869.36 tonnes on Wednesday from 871.66 tonnes on Tuesday.

* Spot silver was flat at $30.78 per ounce, palladium gained 0.1% to $978.85 and platinum steadied at 945.90.

DATA/EVENTS (GMT) 0500 Japan Chain Store Sales YY Dec 0745 France Business Climate Mfg, Business Climate Overall Jan 1100 UK CBI Business Optimism Q1 1330 US Initial Jobless Clm 18 Jan, w/e 1500 EU Consumer Confid. Flash Jan 1530 US EIA-Nat Gas Chg Bcf, Nat Gas-EIA Implied Flow 17 Jan, w/e