Gold Dips as Dollar Surges on China, U.S. Consumer Data

New York (May 18)  Dollar bulls seem to making more of the back and forth on the U.S.-China trade talks than gold bugs.

Bullion and futures of gold hit two-week lows on Friday, breaking decisively from the bullish $1,300 levels, after China’s state-run media expressed impatience over the progress of trade negotiations with Washington. The dollar hit two-week highs, bolstered also by a 15-year high in U.S. consumer sentiment.

Spot gold, reflective of trades in bullion, slid by $10.32, or 0.8%, to $1,276.34 per ounce by 2:15 PM ET (18:15 GMT).

Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled down $10.50, or 0.8%, at $1,275.70 per ounce.

Unlike many assets, gold is in a unique position in the U.S.-China trade war. A positive resolution on that means bullion could benefit from more jewelry and other bullion-related consumption in China. A negative outcome could bolster gold's standing as a safe-haven hedge against further weakening in Chinese growth.

Spot gold reached a one-month peak of $1,303.35 on Tuesday after China countered higher U.S. tariffs on its goods by announcing duty hikes of its own on American merchandise. June gold soared to a one-month high $1,304.20 the same day.

But in recent days, the dollar had caught up as a hedge in the trade war angst.

The dollar index, which measures the greenback against a basket of six currencies, rose by 0.1% to 97.79. It hit a two-week high of 97.84 with Friday's open.

Taoran Notes, a pro-government WeChat blog run by China's state-owned Economic Daily, said it was "meaningless" for Chinese officials to meet with their American counterparts when Washington wasn't showing any sincerity for the welfare of Chinese commerce in striking a trade deal.

The comments, coming just a day after the White House excluded Huawei and other Chinese companies from the U.S. market, are a turn in rhetoric for China, which had previously been patient and hopeful on a deal being reached.

Elsewhere in metals, palladium slumped after a four-day rally but still managed to hold on to its mantle as the world's costliest traded metal.

Spot palladium was down $19.70, or 1.5%, at $1,316.40 an ounce. The silvery-white metal, used for purifying gasoline emissions, traded above $1,600 at one point in early March. But it has lost about 20% since on concerns that it may have rallied too fast, too soon on talk of tight supply.

Trades in other Comex metals as of 2:15 PM ET (18:15 GMT):

Palladium futures down $17.20, or 1.3%, at $1,307.50 per ounce.

Platinum futures down $13.85, or 1.7%, at $819.75 per ounce.

Silver futures down 14 cents, or 1%, at $14.40 per ounce.

Copper futures down 1 cent, or 0.4%, at $2.75 per pound.

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