Gold slips as traders regain their tolerance for risky assets

Bengaluru — Gold prices dipped on Thursday as hopes for a thaw in the US-China trade tensions lifted risk appetite, while some investors booked profits ahead of a meeting by the European Central Bank (ECB).

Spot gold had dropped 0.2% to $1,494.02/oz by 0340 GMT. US gold futures fell 0.1% to $1,501.70/oz.

The US on Wednesday agreed to delay increasing tariffs on $250bn worth of Chinese imports to October 15 from October 1 “as a gesture of goodwill”.

US President Donald Trump postponing additional tariffs on Chinese goods eased trade tensions to an extent, said Brian Lan, MD at dealer GoldSilver Central in Singapore, adding that markets will now be awaiting cues from the ECB meeting.

Hopes of a breakthrough in negotiations between the world’s two biggest economies lifted risk sentiment, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.2%, and the dollar at a six-week high against the safe-haven yen.

The ECB meeting later in the session will be closely watched for clues on what measures the bank is willing to take to support a dampened economy amid Brexit concerns. The US Federal Reserve is expected to do the same next week.

“There seems to be no concrete plans yet [from the ECB]. So investors are waiting and some of them are already starting to take profits. That’s why we don’t see [gold] prices fall much further,” Lan added.

The ECB is set to announces its rate decision at 1145 GMT on Thursday, followed by ECB president Mario Draghi’s news conference at 1230 GMT.

Gold prices have dropped about 4% from a more than six-year high of $1,557 it hit on September 4 as renewed risk appetite and improved economic data dampened demand for the safe-haven metal. These prices are highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.

Gold prices continue to hover near $1,500/oz, Oanda analyst Jeffrey Halley wrote in a note. “It implies that there is still plenty of demand for the safe-haven asset on this dip in prices, which contrasts with the bullish euphoria elsewhere.”

Among other precious metals, silver dropped 0.2% to $18.08/oz, while platinum was little changed at $944.55. Meanwhile, palladium inched 0.7% higher to $1,582.26 an ounce. Palladium was on track for a fourth straight day of gains, while holding close to a two-month high of $1,590 it touched on Wednesday.

Reuters