Gold slips a little as trade jitters ease

London — Gold edged lower on Thursday in response to an easing of trade tension after the US agreed to refrain from imposing tariffs on cars from the EU. The two sides will also begin talks to cut other trade barriers, they announced on Wednesday following a meeting at the White House.

Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade. Spot gold slipped 0.2% to $1,228.33 an ounce by 10.05am GMT, after it rose 0.6% on Wednesday. Earlier in the session, the metal hit $1,235.16, its highest in more than a week. US gold futures for August delivery were 0.3% lower at $1,228.10 an ounce.

“The rise is partially to do with the news that Trump and the EU called a ceasefire on trade war and a halt on auto tariffs,” said Natixis precious metals analyst Bernard Dahdah.

“But gold has been dropping since April so there is a bigger story behind this fall rather than just the EU-US story at the moment.”

Gold is currently trading about 10% off its April high due to pressure from a stronger dollar, but the US currency moved sideways on Thursday.

Meanwhile, the MSCI world equity index rose to its highest since March, signalling investor demand for higher risk assets. “The euro recovery against the greenback has also failed to lift bullion, confirming that there is little investor appetite for the precious metal at this time,” said ActivTrades chief analyst Carlo Alberto De Casa.

Investors are also watching out for the European Central Bank’s (ECB’s) policy meeting, which is due later on Thursday, and second-quarter US economic growth data, which is expected on Friday. The ECB is all but certain to keep policy on hold on Thursday, arguing that the risks from an amplifying global trade conflict don’t warrant a deviation from its plan to gently exit its easy-money policy of the last few years.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 0.29% to 800.20 tonnes on Wednesday. Among other precious metals, silver edged 0.4% lower to $15.50 an ounce, after earlier hitting its highest since July 17 at $15.67 an ounce.

Palladium dropped 0.5% to $934.50 an ounce. It touched $941.10 in the previous session. Platinum was down 0.5% at $836.10 an ounce.

Reuters