Investing.com-- Gold prices rose in Asian trade on Thursday as a warning on the economy from the Federal Reserve pushed traders towards safe havens, although speculation over a U.S. trade deal limited bullion’s gains.

U.S. President Donald Trump said that he will announce a major trade deal on Thursday, sparking some risk-on moves in markets. But a report suggested that the deal may be with the UK, which is likely to limit the economic implications of the agreement.

Gold fell sharply on Wednesday after the U.S. and China confirmed that trade talks will take place this week. But a trade deal from these talks appeared unlikely, especially as both Washington and Beijing showed little signs of backing down from their bitter tariff exchange.

Spot gold rose 0.8% to $3,389.0 an ounce, while gold futures for June rose 0.1% to $3,394.99/oz by 00:36 ET (04:36 GMT).

Fed’s economic warning spurs gold demand

Gold benefited from renewed safe haven flows after the Fed kept interest rates unchanged as widely expected on Wednesday.

But the central bank also flagged a largely wait-and-see approach to any potential rate cuts, citing heightened uncertainty over trade and the economy stemming from Trump’s tariffs.

Fed Chair Jerome Powell signaled that the central bank was in no hurry to ease rates, and that the U.S. economy faced increased uncertainty, especially in the face of a bitter trade war with China.

While higher-for-longer rates present some pressure for gold, the yellow metal is expected to benefit from increased economic ructions due to disruptions in global trade. Weak economic prints from both the U.S. and China, released over the past week, had spurred flows into gold.

Other metal prices advanced on Thursday, recouping a measure of recent losses. Platinum futures rose 0.8% to $986.85/oz, while silver futures rose 0.8% to $33.04/oz. Broader metal prices were dented by an overnight spike in the dollar, following the Fed’s comments.

Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.4% to $9,458.70 a ton, while U.S. copper futures rose 1.1% to $4.6710 a pound.

US-China talks, Trump trade deal spark limited optimism

The announcement of U.S.-China trade talks this week had put some pressure on gold prices, although they recovered a bulk of their losses as markets saw a trade deal as unlikely.

Beijing kept up its criticism of what it considers a U.S.-driven trade war, while Trump said he had no plans to reduce tariffs against China. This set a largely dour tone ahead of trade talks in Switzerland, which are set to take place later this week.

Trump’s announcement of an imminent trade deal with a major country was also dampened by a report suggesting the country in question was the UK.

Britain is not subject to Trump’s steep reciprocal tariffs, and also has a trade deficit with Washington, keeping the actual economic benefits of a trade deal limited.