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Gold Futures Rebound After Recent Losses, Settle Notably Higher

Gold prices edged higher on Wednesday, rebounding from losses in the previous two sessions, after the U.S. and China signed an interim trade deal and the dollar weakened against some major currencies.

The signing of phase 1 trade agreement by the U.S. and China raised optimism about Chinese economic growth and increased demand for the yellow metal.

The dollar index declined to a low of 97.16 earlier in the day, and despite recovering some lost ground as the session progressed, it was still down in negative territory at 97.25, trailing its previous close by about 0.14%.

Gold futures for February ended up $9.40, or about 0.6%, at $1,554.00 an ounce.

On Tuesday, gold futures ended down $6.00, or 0.4%, at $1,550.60 an ounce.

Silver futures for March ended up $0.246 at $17.988 an ounce, while Copper futures for March gained $0.0075 to $2.8660 per pound.

Data released by the Labor Department showed a modest increase in U.S. producer prices in the month of December.

The Labor Department said its producer price index for final demand inched up by 0.1% in December after coming in unchanged in November. Economists had expected prices to rise by 0.2%.

Excluding food and energy prices, core producer prices still crept up by 0.1% in December after dipping by 0.2% in November. Core prices were also expected to increase by 0.2%.

A report from the Federal Reserve Bank of New York showed a modest acceleration in the pace of growth in regional manufacturing activity in the month of January. The report said its general business conditions index edged up to 4.8 in January from a revised 3.3 in December, with a positive reading indicating growth in regional manufacturing activity.

The U.S. and China officially signed an historic phase one trade deal on Wednesday in an effort to defuse the bitter trade dispute between the two economic superpowers.

President Donald Trump signed the agreement along with Chinese Vice Premier Liu He, Beijing's chief trade negotiator, in a ceremony at the White House.

The deal calls for China to purchase $200 billion worth of U.S. goods over the next two years, including up to $50 billion worth of agricultural products. It also purportedly addresses issues such as China's intellectual property theft, forced technology transfers and currency manipulation.

In exchange, the U.S. will scrap a new round of tariffs and cut tariffs on approximately $120 billion worth of Chinese goods in half to 7.5%.

Trump noted a 25% tariff on $250 billion worth of Chinese imports will remain in place in order to give the U.S. leverage as the two countries enter into phase two negotiations.

"We're leaving tariffs on, but I will agree to take those tariffs off if we are able to do phase two. In other words, we're negotiating with the tariffs," Trump said.

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