(Updates prices)
* Palladium climbs after declining 3 pct on Friday
* Speculators raise net gold short positions in week to Nov.13
* GRAPHIC-2018 asset returns: By Swati VermaNov 26 (Reuters) - Gold firmed on Monday, supported byuncertainty over the future pace of U.S. interest rate hikes andthe outcome of the G20 summit later this week when globalleaders will focus on trade tensions.
Spot gold was steady at $1,222.42 per ounce at 1:30p.m. EST (1830 GMT). U.S. gold futures settled downmostly unchanged at $1,222.40 per ounce.U.S. President Donald Trump and his Chinese counterpart XiJinping are expected to discuss their trade dispute at the G20summit in Argentina, which begins on Friday.
"If Trump and Xi can't come to an agreement at the G20meeting, I think you will see a pause in the U.S. FederalReserve's rate increases next year ... which in turn will helpgold prices go higher," said Walter Pehowich, executive vicepresident of investment services at Dillon Gage Metals.Uncertainties related to Brexit and Italy are also helpingbuild a base for gold, which was helped by a slight retreat inthe dollar earlier in the session, he added.The euro gained against the dollar on signs Italy may cutits budget deficit target to satisfy the European Union, whilethe sterling rose after the EU and Britain sealed a Brexit deal. Analysts remain cautious, however, as the Brexit deal facesstiff opposition in the British parliament. Gold's direction in the near term would be determined bymoves in the greenback, which could be pressured if the Fedtakes a more cautious approach to future policy tightening amidconcern of an economic slowdown next year, analysts said."The metal could be in for a sizeable drop should support at$1,220 break, in which case a return back down to the nextsupport at $1,205 would become likely," said Fawad Razaqzada, ananalyst with Forex.com.
"With the 10-year U.S. bond yields on the rise again, thismay support the greenback and simultaneously prevent gold fromgoing higher." Gold prices have lost about 10 percent from their April peakand are down 6 percent so far this year."Given that (speculative) positioning is at its lowest levelsince 2002, we find it difficult to see gold going any lower andexpect it to rebound as soon as strong dollar trend begins tofade," Goldman Sachs analysts said in a note. Speculators increased their net short positions in Comexgold and silver contracts in the week to Nov. 13. "If U.S. growth slows down next year, as expected, goldwould benefit from higher demand for defensive assets," Goldmansaid.Among other precious metals, silver rose 0.1 percentto $14.25 an ounce and platinum was up 0.8 percent at$845.50.Palladium climbed 2.2 percent to $1,143.49 an ounce.Prices fell about 3 percent in the previous session, theirbiggest one-day percentage decline since Aug. 15. (Reporting by Swati Verma, Nallur Sethuraman and K. SathyaNarayanan in BengaluruEditing by Marguerita Choy and Matthew Lewis)
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