PRECIOUS-Gold retreats sharply as U.S.-Mexico deal curbs safe-haven demand

* Speculators raised net longs in gold in week to June
4-CFTC
* China's trade surplus with U.S. rose to $26.89 bln in May
* U.S. Fed futures price in 2 rate cuts in 2019

(Updates prices)
By Arijit Bose
June 10 (Reuters) - Gold prices skidded 1% on Monday,
retreating from a 14-month peak hit in the previous session
after an agreement between the United States and Mexico to avert
a tariff war crimped safe-haven demand for the metal.
Spot gold XAU= was down 1% at $1,327.32 per ounce, as of
0725 GMT. In the previous session, the bullion hit its highest
since April 19, 2018 at $1,348.08 an ounce.
U.S. gold futures GCv1 also fell 1%, to $1,332.10 an
ounce.
"Talks between the U.S. and Mexico seem to have smoothened
out already and the (gold) market seems to have lost its
safe-haven appeal a little bit," said Ronald Leung, chief dealer
at Lee Cheong Gold Dealers in Hong Kong.
"However, hopes that the U.S. Federal Reserve will reduce
the interest rate are still looking a little positive for gold."
The United States and Mexico struck a deal on Friday to
avert a tariff war, with the latter agreeing to rapidly expand a
controversial asylum programme and deploy security forces to
stem the flow of illegal Central American migrants. U.S. President Donald Trump also defended the deal against
criticism that there were no major new commitments to stem a
flow of Central American migrants crossing into the United
States, and said on Sunday more details would soon be released.
Global equities also took heart from Washington's plans to
shelf the imposition of tariffs on Mexico, and as Friday's weak
U.S. jobs data raised hopes for U.S. interest rate cuts.
MKTS/GLOB Expectations that the U.S. Federal Reserve might deliver a
rate cut, however, provide a glimmer of hope for gold bulls
since lower interest rates increase the opportunity cost for
holding bullion.
Fed fund futures now price in more than two 25-basis point
rate cuts by the end of this year, with one almost fully priced
in by July, especially as weak data from the United States and
an unending Sino-U.S. trade spat cloud global economic outlook.
China's trade surplus with the United States, which has been
a major sticking point with Washington, rose to $26.89 billion
in May, from $21.01 billion in April, customs data showed.
On Saturday, the chief editor of China's Global Times
newspaper said China was preparing to curb some technology
exports to their trade adversaries, thawing hopes of a
Mexico-like settlement to the Sino-U.S. trade war. Speculators also raised net long position in COMEX gold in
the week ended June 4, data from the U.S. Commodity Futures
Trading Commission (CFTC) showed on Friday. CFTC/
Elsewhere, silver XAG= shed 1.5% to $14.77 per ounce.
Platinum XPT= fell 0.4% to $802.91 an ounce, while
palladium XPD= eased 0.1% to $1,356.25 an ounce.