Gold eases as positive trade talk lifts risk appetite

Bengaluru — Gold was largely muted on Tuesday, weighed down by buoyant Asian shares that cheered progress in trade talks between the US and China, but found support from a lack of clarity in the negotiation details.

Spot gold was little changed at $1,484.12 an ounce as of 4.23am GMT. US gold futures shed 0.1% to $1,487.10 an ounce.

China and the US have achieved some progress in their trade talks, Chinese vice-foreign minister Le Yucheng said on Tuesday, adding that as long as both sides respected each other, no problem could not be resolved.

Le’s comments came a day after US President Donald Trump spoke of optimism about a deal, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if talks go well.

This cheered markets and pushed the benchmark S&P 500 stock index within striking distance of a record high on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.1% on Tuesday.

“Equities markets are in a risk-on mode, and there seems to be a lack of support for gold prices and precious metals,” said Margaret Yang Yan, a market analyst at CMC Markets, adding that fears of a no-deal Brexit had ebbed and progressing US-China trade talks gave markets some relief.

In the latest on the Brexit proceedings, British Prime Minister Boris Johnson’s parliamentary battle starts again on Tuesday, when MPs will debate and vote on the Withdrawal Agreement Bill, the detailed legislation that puts his exit deal into British domestic law.

“The slip in prices does not mean gold will continue to decline, because the market sees the Fed cutting another 25 basis points in its October meeting. For now it still looks like a healthy correction,” Yan said

Investors await a US Federal Reserve meeting at the end of October that could offer further signs of monetary easing. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Among other precious metals, silver slipped 0.1% to $17.55 an ounce, snapping a four-day gaining streak. Platinum dropped 0.5% to $883.36 and palladium gained 0.6% to $1,768.63 an ounce.

Reuters