Gold eases over doubts on US-China trade war, faces worst month in 3-years

Investors were uncertain about the fate of a 'phase-one' trade deal between the two economies

Gold eased on Friday, but was still on track to post its biggest monthly decline in three years, as investors sought clarity on the US-China trade developments after United States backed anti-government protesters in Hong Kong.

Spot gold eased 0.1 % to $1,456.10 per ounce as of 1252 GMT, while US gold futures inched 0.1% higher to $1,455.30.

"Gold is trading sideways awaiting clarity on how the Chinese will react to the latest developments on the Chinese-US trade deal. At the moment, a risk-off environment is providing moderate support to gold," said UBS commodity analyst Giovanni Staunovo.

Investors were uncertain about the fate of a 'phase-one' trade deal between the two economies, after Beijing warned the United States on Thursday it would take "firm counter measures" in response to US legislation backing anti-government protesters in Hong Kong.

This weighed on risk assets, with European shares down for a second session, and provided support to safe-haven gold.

"I am surprised that gold has managed to hold above $1,450 since there is some bargain hunting. This is a good entry level for the ones who missed out previously," UBS' Staunovo said.

Gold was, however, down about 3.7% for the month thus far, which could be its biggest monthly decline since November 2016.

Investors are scaling back rate-cut bets after robust US economic growth data on Wednesday set gold on a likely path to end the week lower for a second straight week.

"The market is pricing in a reduced probability of a rate cut at the December FOMC meeting," Suki Cooper, precious metals analyst at Standard Chartered Bank, said through email.

"We expect the Fed to remain on hold in December and throughout 2020 as long as growth is close to trend and risks of external shocks are moderate."

Inflation rose to an annual rate of 1.0% in the euro zone in November, according to a first estimate from the European Union's statistics agency, in the midst of fears of a slowdown in the global economy.

Amongst other precious metals, silver was up 0.4% at $16.95 per ounce, and platinum dropped 0.4% to $898.15, despite being on track to extend gains for a third week.

Palladium was largely unchanged at $1,840.29 an ounce, and has gained about 3.6% so far this week. The metal, used largely in the making of catalytic converters, hit a record peak of $1,844.50 earlier in the session.