Gold steadied on Tuesday as robust U.S. manufacturing data lifted risk appetite and countered support from lingering doubts on U.S.-China trade, while scarce palladium retreated after its record run towards the $2,000 an ounce level.
U.S. manufacturing output rebounded more than expected in November, the U.S. central bank said, keeping Wall Street near record levels.
"The competition for gold today is equities... but there is danger out there in the way central banks are behaving, gold has to reflect that. We've created an environment where we require central banks to move the economy forward," said Rob Lutts, chief investment officer at Cabot Wealth Management.
While the United States and China claimed to have reached an initial trade agreement, there were still many questions left unanswered. The preliminary deal reached last week will double U.S. exports to China, White House adviser Larry Kudlow said on Monday.
Washington will also reduce some tariffs on Chinese goods. U.S. officials have touted a deal, but Chinese officials have been more cautious, emphasizing the dispute has not been completely settled. "From a technical standpoint, gold is in a bull market... Trade deficits and negative interest rates across the globe have been good for gold," said Michael Matousek, head trader at U.S. Global Investors.
Elsewhere, British Prime Minister Boris Johnson, emboldened table, saying he would make extending the transition period beyond 2020 illegal. Gold is generally used by investors as a place to park assets during economic or political uncertainty.
Spot palladium shed 01.5% to $1,948.14 per ounce, retreating from an all-time high of $1,998.43 hit earlier in the session.
The metal, used heavily by the auto-sector in the making of catalytic converters, could see a surge in demand owing to stringent anti-carbon emissions globally.
"Supply is tight and when you're adding the speculation about a potential pick-up in demand due to recovery in the global economy, you have a perfect storm of bullish news continuing to keep palladium supported," Saxo Bank analyst Ole Hansen said.
Last week's mine shutdowns in South Africa added fuel to palladium's upward surge. "It's times like these that create the opportunities to buy on pull backs," Matousek said.
Platinum eased 0.7% to $922.56 an ounce, while silver was little changed at $17.03.