Gold prices fell on Friday as risk appetite was whetted by comments from White House economic adviser Larry Kudlow that the United States is nearing an interim trade pact with China.
Spot gold was down 0.5 per cent at $1,464.17 per ounce, as of 07:54 GMT, but was set to rise about 0.4 per cent this week. US gold futures were down 0.6 per cent at $1,464.30 per ounce.
Asian stocks jumped, denting bullion’s safe-haven appeal, tracking a record S&P 500 finish, as hopes revived that the world’s top two economies were nearing a phase 1 deal. Kudlow said on Thursday, an agreement could come soon. ‘There is optimism in the market that the first phase of the trade deal will be signed soon. So, gold and silver prices are falling,’ said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers, adding prices could fall up to $1,420.
A steady dollar index against a basket of six major currencies also weighed on the bullion. Gold prices have gained more than 14 per cent this year as the on-again, off-again trade spat has roiled financial markets and prompted fears of a global economic slowdown.
A Reuters poll of economists showed a permanent truce is unlikely over the coming year, and, while concerns have eased over a US recession, an economic rebound is also not expected soon.
Ilya Spivak, a senior currency strategist at DailyFx, said ‘risks associated with the political and economical issues like Brexit, Hong Kong and trade talks are ‘too great for something not to go wrong,’ and these risks will put a floor under gold prices and if something goes really wrong then prices will go higher. In Hong Kong, anti-government protesters paralysed parts of the financial hub for a fifth day.
Investors are now awaiting the US retail sales and industrial production data for the previous month, expected later in the day.
Among other precious metals, silver was down 0.8 per cent to $16.87 per ounce. It was poised to gain 0.5 per cent this week, while platinum dipped 0.3 per cent to $877.26 per ounce and was set to register a weekly decline of 1 per cent.
Palladium shed 0.3 per cent to $1,731.08 per ounce, en route to fall 0.8 per cent this week.
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