More appetite for risk pushes gold price down

Bengaluru — Gold prices edged lower on Friday as improved risk appetite amid signs of a thaw in the long-drawn US-China trade tiff drew investors away from the safe-haven metal, while palladium retreated slightly from a record peak hit in the previous session.

Spot gold fell 0.1% to $1,496.76/oz by 5.21am GMT, declining about 0.7% so far this week in what could be its third straight weekly drop.

US gold futures dipped 0.2% to $1,504.30/oz.

“The heated-up environment between the US and China has cooled off and so have [gold] prices,” Religare Broking’s vice-president of metals, energy and currency research, Sugandha Sachdeva, said.

The two sides have been making conciliatory gestures ahead of scheduled trade talks in October, lowering the temperature between them and cheering investors.

US President Donald Trump said on Thursday that he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as he said an “easy” agreement would not be possible.

Asian equities rose as hints of progress in trade talks between the world’s two top economies and aggressive stimulus from the European Central Bank helped buoy risk sentiment.

The ECB’s chief, Mario Draghi, pledged indefinite stimulus on Thursday to revive an ailing eurozone economy.

The bigger-than-expected stimulus will increase pressure on the US Federal Reserve and the Bank of Japan to ease policy next week to support a world economy increasingly characterised by low growth and protectionist threats to free trade.

“The next major wave of move in gold prices will be governed by the outcome of upcoming Fed meeting.…That said, prices are likely to gyrate between $1,480/oz-$1,550/oz ounce in the immediate short term,” Sachdeva said.

Meanwhile, palladium fell 0.6% to $1,608.01/oz, after hitting a record high of $1,621.55//oz on Thursday as possible labour issues in SA mines stoked supply concerns. The automotive catalyst metal was on track for a sixth straight weekly gain, its longest winning streak since 2016.

Among other precious metals, silver shed 0.3% to $18.03/oz, while platinum dropped 0.3% to $947.97/oz. Platinum has declined about 0.6% in the week after three consecutive weekly gain. 

Reuters