Gold slips as investors’ risk appetite returns

Bengaluru — Gold prices slipped on Monday as risk aversion waned with the progress in US-China trade talks, while a firm dollar kept the bullion under pressure.

Spot gold was down 0.4% to $1,312.56/oz as of 4.55am GMT, having hit their highest since April 26 at $1,326.30 on Thursday.

US gold futures fell 0.4% to $1,317/oz.

“The plunge [from Thursday’s peak] came along with fading enthusiastic for safe-havens, as US and China are moving to close a deal and many uncertainties surrounding the US government shutdown, Brexit, Fed policy were cleared last week,” said Margaret Yang, a market analyst with CMC Markets.

The US-China trade talks had a “good vibe” with much work remaining, White House economic adviser Larry Kudlow said on Friday, fanning the hope of an end to the long-drawn trade tiff between the world’s two largest economies.

Meanwhile, the dollar was near a one-week high against the yen on the back of robust US jobs data.

“Upbeat nonfarm payroll suggests the US economy is riding a strong momentum, dampening demand for safe-haven assets like gold,” Yang said, adding that this failed to change the market’s view of the Federal Reserve’s dovish stance with regard to its monetary tightening policy.

Despite signs of a robust economy, the Fed is widely expected to keep rates steady this year, thanks to heightened worries over global growth, especially in China and Europe.

Gold trade was subdued with top consumer China closed all week for the Lunar New Year.

Spot gold may test a support at $1,311/oz, a break below which could cause a loss to the next support at $1,299, said Reuters analyst Wang Tao.

“I think gold will revisit the band of short-term support at $1,306-$1,310 but remains fairly well supported,” said Nicholas Frappell, global general manager, ABC Bullion.

Among other precious metals, palladium slipped to $1,349.00/oz.

Silver dipped 0.6% to $15.82/oz, while platinum fell 0.4% to $818.50.

Reuters