Gold prices fall from one-month peak as report indicates progress in U.S.-China talks

Gold futures slipped lower Wednesday, pulling back from a nearly one month high, as a recent report that trade talks between Beijing and Washington are progressing dulled some haven demand for the metal.

Just a day earlier, President Donald Trump suggested that he could delay a partial resolution until after the 2020 presidential elections.

“Gold prices continue to trade off of every trade headline,” said Edward Moya, senior market analyst, at Oanda.

Bloomberg News reported early Wednesday that a Sino-American trade pact was close to coming to fruition and that details on a partial roll back of import duties was being discussed, despite recent rhetoric that suggested that the tensions between the parties was becoming inflamed.

Gold for February delivery GCG20, -0.44% on Comex lost $3.90, or 0.3%, at $1,480.50 an ounce, after jumping 1% Tuesday to the highest settlement for a most-active contract since Nov. 6, according to FactSet data. March silver SIH20, -2.02%, meanwhile, shed 18.8 cents, or 1.1%, to trade at $17.06 an ounce, following a 1.7% surge in the previous session.

The fresh reports come after Trump on Tuesday said it might be preferable to hold off on completing a long-awaited U.S.-China trade deal until after the November 2020 presidential race.

The developments around trade come ahead of a Dec. 15 deadline for the imposition of fresh import tariffs on China.

Gold has benefited from lower yields in government debt, like the 10-year Treasury note TMUBMUSD10Y, +3.15% at around 1.75%, and softness in the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.14%, because lower rates can reduce the opportunity cost of owning gold versus the perceived safety of government paper and a weaker buck can make dollar-pegged bullion more attractive to buyers using other currencies.

Gold continued its decline despite some disappointing U.S. data, with U.S. private sector employment up by 67,000 in November, according to payroll processor ADP—the smallest increase since May. The ISM services survey dropped to 53.9 in November from 54.7.

The uncertainty surrounding a trade deal, even in the face of Wednesday’s optimism, has tempered the enthusiasm for gold bears.

“Appetite towards the precious metal is likely to receive a boost if Washington moves ahead with the tariff hikes on December 15,” wrote the research team at FXTM in a daily research note. “Brexit and global growth concerns are also seen as other risks which may push the precious metal higher in December.”

Among other metals Wednesday, March copper HGH20, +1.51% added 1.3% to $2.657 a pound, set to recoup its 1% loss from a day earlier. January platinum PLF20, -0.83% fell by 0.5% to $907.10 an ounce, while March palladium PAG20, +0.00% traded at $1,836.80 an ounce, up 0.7%.

CNBC

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Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments 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 BNN, CNBC and Bloomberg, and is often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya