* Traders see 94% chance for 25 basis point rate cut by Fed
* Palladium hovers near all-time high of $1,808.81/oz
(Updates prices)
By Asha Sistla
Oct 29 (Reuters) - Gold fell to a one-week low on Tuesday as
hopes for a U.S.-China trade deal buoyed risk sentiment, while
gold investors will watch how other financial markets react to
this week's Federal Reserve meeting at which the central bank is
widely expected to cut U.S. interest rates.
Spot gold XAU= was down 0.3% at $1,487.54 per ounce as of
02:02 p.m. EDT (1802 GMT). U.S. gold futures GCcv1 settled
0.3% lower at $1,490.70 an ounce.
"Gold is still down due to the general positive tone in the
markets right now regarding the U.S.-China trade war and
Brexit," said Chris Gaffney, president of world markets at TIAA
Bank, adding an expected interest rate cut by the Fed could lift
gold back above $1,500.
U.S. President Donald Trump said on Monday he expected to
sign a significant part of the trade deal with China ahead of
schedule, boosting risk appetite. On Monday, the S&P 500 stock
index jumped to a record high. MKTS/GLOB Washington was also considering an extension on tariff
suspensions on $34 billion of Chinese goods. The Fed meets on Tuesday and Wednesday, and investors see a
94% chance for a 25 basis point rate cut. The U.S. central bank
has already lowered interest rates twice this year. FEDWATCH
"The question is how much emphasis (Fed Chair Jerome) Powell
will put on slowdown in global growth - if he really emphasises
on that, the markets would think the rates could go lower,
boosting gold," said TIAA Bank's Gaffney.
Lower interest rates make gold attractive as it reduces the
opportunity cost of holding the metal.
"The bullish case for gold is still intact; it's likely to
be in a larger $1,485-$1,525 range for the next month or so,"
said George Gero, managing director at RBC Wealth Management.
Palladium XPD= was down 1.1% at $1,780.17 per ounce, a day
after hitting a record high of $1,808.81 on a supply shortage.
"The market is in its eighth consecutive deficit year and is
likely to stay in the ninth consecutive deficit year next year
as well as supplies are not really growing," UBS commodity
analyst Giovanni Staunovo said.
Silver XAG= shed 0.3% to $17.81 per ounce, while platinum
XPT= was steady at $918.79.