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Gold recovers from one-week low as trade deal hopes fade

Gold gained on Monday, recovering from a more than one-week low touched in the previous session, as U.S.-China trade deal hopes dampened following a report China wanted further trade talks before finalising a so-called “phase one” of the deal.

Spot gold rose 0.25% to $1,493.2 per ounce, having shed 1% last week. U.S. gold futures gained 0.6% to $1,497.6 per ounce.

“Reassessment – which is why gold is seeing a little fluctuation below 1,500, it’s a reassessment of the Chinese trade deal, the Brexit and of what the U.S. Federal Reserve may or may not do going forward,” said George Gero, managing director at RBC Wealth Management.

“The dollar index is up and keeps gold from a major rally, because international investors are buying U.S. securities using dollars.”

China wants to hold another round of trade talks by the end of October to nail down further details before Chinese President Xi Jinping agrees to sign the trade deal outlined by U.S. President Donald Trump, Bloomberg reported.

The dollar index against a basket of six major currencies gained 0.2% and global stock markets dipped as trade optimism flagged after the report.

Meanwhile, U.S. Treasury Secretary Steven Mnuchin said an additional round of tariffs on Chinese imports may be imposed if a trade deal with China has not been reached by Dec. 15.

“The news that China wants to have more talks before the trade deal is something that is sinking the optimism that came on Friday after a big announcement from President Trump,” said Edward Moya, a senior market analyst at OANDA.

“Overall bullish trend (for gold) is intact. There’s just been a plethora of reasons why you’re seeing demand from all over the world.”

On the European front, investors will be focused on a summit between the European Union and Britain in Brussels later this week, with a deal to smooth Britain’s departure from the EU hanging in the balance as diplomats indicated the bloc was pushing for more concessions.

In other precious metals, palladium was up 0.3% to $1,704.50 an ounce, having earlier hit a fresh record high of $1,710.10.

The metal used in vehicle exhausts to reduce harmful emissions retreated from its record high after weak Chinese auto sales numbers, while the market grappled with sustained supply shortfall.

Silver was up 0.5% to $17.63 per ounce and platinum rose 0.7% to $895.57.

CNBC [1]

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Ed Moya

Ed Moya [5]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya