You are here

Gold drops as trade deal hopes boost Wall Street to record

nz_gold_281134.jpg
Gold fell on Wednesday as equities climbed to record levels bolstered by hopes that the United States and China were close to signing an initial trade deal and by the release of robust US economic data.

[BENGALURU] Gold fell on Wednesday as equities climbed to record levels bolstered by hopes that the United States and China were close to signing an initial trade deal and by the release of robust US economic data.

Spot gold dipped 0.5 per cent to US$1,454.41 per ounce as of 2.03pm ET (1903 GMT), slipping five sessions in six.

US gold futures settled 0.5 per cent lower at US$1,453 per ounce.

"Given the situation, the statements from the White House that the US-China trade deal may be imminent is continuing to drive risk appetite a bit higher," said Bart Melek, head of commodity strategies at TD Securities.

sentifi.com

Market voices on:

"There is less interest in gold as a hedge, and a higher opportunity cost to hold zero yielding assets like gold."

Wall Street hit fresh record levels on Wednesday while world shares were close to notching a record peak in the session after US President Donald Trump said the world's two largest economies were in the "final throes" of signing an initial trade deal.

Market confidence was buoyant and investors moved away from safe-haven gold.

The CBOE VIX equity volatility index, often referred to as a fear gauge, was at seven-month lows.

The absence of signs of further monetary policy easing in the near term by the US Federal Reserve did little to support gold.

Fed Chair Jerome Powell said on Monday that monetary policy was "well positioned" to support the strong US labour market.

Higher interest rates boost the US dollar, making US dollar-denominated gold more expensive for buyers using other currencies, and they reduce investor interest in non-yielding bullion.

US economic growth picked up slightly in the third quarter, rather than slowing as initially reported, assuring markets that the world's largest economy was healthy despite fears of the impact of the long-drawn trade war. Weekly jobless claims also declined, while core capital goods ordered posted their biggest gain in nine months.

"Gold remains range-bound with hard support sitting toward US$1,445-US$1,450... While top-side resistance cuts in toward US$1,475-US$1.480," analysts at MKS PAMP said in a note.

Palladium jumped 1.1 per cent to US$1,830 an ounce, after hitting a record high of US$1,834.76 in the session.

Silver dropped 0.6 per cent to US$16.96 per ounce, platinum slipped 1.5 per cent to US$893.94.

REUTERS