Gold Prices Hold Gains Despite Apparent Scaling Back of U.S.-China Trade Tensions

26/08/2019 13:56:12 Commodities

Gold prices ran out of steam on Monday, pulling back from intraday highs, as Washington and Beijing toned down their tough trade rhetoric, dampening demand for the safe-haven precious metal.

Spot gold gained $6.14, or 0.4%, to $1,533.06 a troy ounce by 9:50 AM ET (13:50 GMT), while gold futures for December delivery on the Comex division of the New York Mercantile Exchange, rose $5.00, or 0.3%, to $1,542.60.

Spot gold had passed $1,550 per ounce for the first time in more than six years as heightened trade tensions between the U.S. and China, complete with additional tariff threats, sent traders fleeing to safe-haven assets.

But U.S. President Donald Trump appeared ready to calm nerves, saying that Beijing had gotten in touch with top U.S. trade officials and was ready to come “back to the table” for negotiations.

Beijing’s top trade negotiator, Vice Premier Liu He, also seemed ready to tone down China’s stance, calling for “consultation and cooperation with a calm attitude" in order to resolve the trade dispute.

Financial markets reacted to the apparent shift in posture although analysts suggested that ongoing uncertainty would still provide support for gold.

“In this testy trade and currency war infused environment, the golden brick road to $1,600 is looking much better defined by the hour,” Stephen Innes, managing partner at VM Markets, said in a note. analyst Pinchas Cohen suggested the current paring of gains could be a rare buying opportunity.

“Even if this time is actually different and trade issues are actually, finally worked out, gold will likely strengthen against a falling dollar in any case,” he said. “And, as of now, 10-year yields are hovering around 1.5% or below, at the low of the day, their lowest point since July 2016, demonstrating that institutions are not buying into this sudden and miraculous trade turnaround.”

In other metals trading, silver futures gained 1.4% to $17.797 a troy ounce by 9:53 AM ET (13:53 GMT).

Palladium futures advanced 0.2% to $1,459.90 an ounce, while sister metal platinum rose 0.3% to $858.15.

In base metals, copper was little changed at $2.535 a pound.