Gold tumbles nearly 2% as trade truce dents safe-haven demand
Gold rose to $1,438.63 an ounce on June 25, its highest since May 14, 2013, as the US dollar weakened and as investors sought safe-haven assets on concerns about the escalation of the nuclear dispute between the US and Iran.Updated: Jul 01, 2019 15:05 IST
Gold prices fell nearly 2% on Monday to their lowest in more than a week as the dollar strengthened and investors opted for riskier assets after the United States and China agreed to restart trade talks.
Spot gold was down 1.7% at $1,384.81 per ounce as of 0724 GMT, after falling to its lowest since June 20 at $1,381.51.
U.S. gold futures dipped 1.8% to $1,388.20 an ounce.
“Reopening of trade talks between U.S.-China has made investors look back at growth, we are seeing good support for the share markets across the region and safe-havens are in less demand,” said Michael McCarthy, chief market strategist, CMC Markets.
“We are likely to see increased volatility. Gold prices have pulled back from an important technical level of around $1,430, that could mean that we will see a test at support around the $1,380 mark.”
Gold rose to $1,438.63 an ounce on June 25, its highest since May 14, 2013, as the U.S. dollar weakened and as investors sought safe-haven assets on concerns about the escalation of the nuclear dispute between the United States and Iran.
However, prices slid from there on hopes for renewed talks to end the trade dispute between the United States and China, the world’s two largest economies.
That optimism was realized when the two sides agreed on Saturday to restart trade talks after U.S. President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei.
The progress made on the sidelines of G20 summit between Washington and Beijing lifted global financial markets, denting the appeal for the safe-haven metal.
Further pressuring gold prices, the dollar index jumped to a more than one-week high on Monday, making non-interest bearing bullion more expensive for holders of other currencies.
However, China and the United States will face a long road before they can reach a deal to end their bitter trade war, with more fights ahead likely, Chinese state media reported on Sunday.
“Although the downwards price reaction in gold to the trade deal seems to be logical, we do think the jury is still not out just yet on the ultimate result,” INTL FCStone analyst Edward Meir said in a note.
Meanwhile, holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.22% on Friday.
Hedge funds and money managers boosted their bullish stance in COMEX gold in the week to June 25, the U.S. Commodity Futures Trading Commission said on Friday.
Among other precious metals, silver fell 0.9% to $15.17 per ounce and palladium was steady at $1,538.12.
Platinum eased 0.1% to $832.19 an ounce, falling from a six-week peak touched in the previous session.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)