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Gold gains as weak China data dents risk appetite

By Sumita Layek
FILE PHOTO: Newly casted ingots of 99.99% pure gold are stored after weighing at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk

By Sumita Layek

(Reuters) - Gold prices inched up on Thursday as Asian equities turned lower after weaker-than-expected economic data out of China weighed on risk appetite, boosting demand for safe-haven assets.

Spot gold <XAU=> was up 0.2% at $1,466.51 per ounce, as of 0752 GMT, while U.S. gold futures rose 0.3% at $1,467.10 per ounce.

Asian stocks fell after China's industrial output grew significantly slower than expected in October, as weakness in global and domestic demand and the drawn-out Sino-U.S. trade war weighed on activity in the world's second-largest economy.

"Gold is being supported as the Chinese industrial production and retail sales came way below expectations," OANDA analyst Jeffrey Halley said.

"Another deterioration in Hong Kong this week will further support gold, but it's really all about this ongoing trade talks, which is becoming like a broken record."

China's Commerce Ministry said cancelling tariffs is an important condition for reaching trade agreement with the U.S., a day after U.S. President Donald Trump threatened to ramp up tariffs on Chinese goods if the countries failed to reach a deal on trade.

U.S. Federal Reserve Chair Jerome Powell on Wednesday told the Joint Economic Committee that negative interest rates sought by Trump are not appropriate for the U.S. economy right now.

He also added that the central bank would probably stop (with interest rate cuts) where it is unless there is a "material" change in the economic outlook.

"Investors are stuck with rising trade tensions with Trump threatening additional tariffs again, but what's weighing on gold is the hawkish stance from the Fed overnight, saying rate cuts are on hold for now," ANZ analyst Daniel Hynes said.

"In the long term, the backdrop is pretty conducive. With the global central banks being accommodative, gold will get its support."

The Fed has cut interest rates thrice this year to help sustain U.S. growth. A lower interest rate reduces the opportunity cost for holding the non-yielding bullion.

In Hong Kong, anti-government protesters paralysed parts of the city for a fourth day, forcing school closures and blocking highways and other transport links.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust fell 0.04% to 896.77 tonnes on Wednesday.

Elsewhere, palladium <XPD=> climbed 1% to $1,726.50 per ounce. Silver <XAG=> rose 0.2% to $16.98 per ounce, while platinum <XPT=> gained 0.3% to $876.35 per ounce.


(Reporting by Sumita Layek and Diptendu Lahiri in Bengaluru; Editing by Sherry Jacob-Phillips)