· Gold prices fell on Monday as risk-on sentiment, bolstered by the upcoming signing of a preliminary U.S.-China deal and signs of de-escalation in the Middle East, dampened demand for safe-haven bullion.
Spot gold fell 0.8% to $1,549.50 per ounce, having fallen 1% to $1,546.27 earlier in the session. U.S. gold futures settled down 0.6% at $1550.60.
· “You remove the risk of geo-political tensions rising and you don’t quite need gold to beef up your portfolio,” said Bart Melek, head of commodity strategies at TD Securities.
· Stock markets around the world lingered just below record levels, buoyed by the expected signing of the Phase 1 U.S.-China trade deal. The trade agreement, due to be signed at the White House on Wednesday, marks the first step towards ending an 18-month-long trade dispute between the world’s two largest economies.
· The U.S. dollar also rose against a basket of rivals, making bullion more expensive for holders of other currencies. Signaling a further ramp down of trade tensions, a Wall Street Journal report said on Saturday that Washington and Beijing had agreed to semi-annual talks aimed at pushing reforms and resolving disputes.
· Gold, considered a safe investment during political and economic turmoil, rose to a near seven-year peak of $1,610.90 last week after a U.S. drone strike killed a top Iranian commander in Baghdad and Iran launched missiles against U.S. bases in Iraq in retaliation.
· The rally, however, faded with a lack of further military escalation in the region. Markets will still keep an eye on tensions with Iran over the accidental shooting of a passenger plane, and the finer points of the implementation of the U.S.-China deal, analysts said.
· Reflecting investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.9% to 874.52 tonnes on Friday, their lowest since Sept. 16.
· “Gold will remain vulnerable to spikes but could trend lower in the interim, with a break of $1,540 potentially triggering a move back towards $1,520,” OANDA analyst Craig Erlam said in a note.
· Elsewhere, palladium rose 0.6% to $2,129.23 an ounce. Silver was down 0.6% at $17.98, while platinum fell 0.4% to $974.65.
Reference: CNBC
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