Gold price pulls back as U.S.-China trade talks dull haven appeal

New York (Sept 5)  Gold traded lower Thursday, finding its haven appeal dulled after the U.S. and China agreed to another round of trade talks next month, providing a boost to U.S. and global stock markets.

Gold for December delivery GCZ19, -2.31%  on Comex fell $23.30, or 1.5%, at $1,537.10 an ounce, looking to give up the bulk of the roughly 2% gain it scored over the past two trading sessions. December silver SIZ19, -3.82%  fell 40.7 cents, or 2.1%, to $19.14 an ounce, on the retreat after settling Wednesday at its highest since September 2016.

Rising trade optimism fed a rally in U.S. stocks, drawing investor interest away from gold as the Dow Jones Industrial Average DJIA, +1.68%  moved sharply higher in Thursday dealings. European and Asian benchmark stock indexes were also mostly higher.

”We’ve been here before and will unlikely see safe havens sold hard until we get meaningful de-escalation from both the Chinese and American tariffs,” said Edward Moya, senior market analyst at Oanda, in a note. “Gold is also approaching an overbought level that is similar to the oversold moment we saw in 2013, which signaled another major move which eventually identified a key trading range.”

U.S. and Chinese negotiators will meet in early October, the Chinese Commerce Ministry said. The talks are aimed at ending a long-running trade war that has heightened worries about the global economic outlook and stoked recession fears.

Those concerns and a number of other geopolitical worries, including the prospect of a messy U.K. exit from the European Union, have been credited with lifting gold, a traditional haven that tends to appreciate during periods of rising uncertainty. Gold is up around 20% in the year to date and earlier this week hit the latest in a string of more-than-six-year highs.

Meanwhile, some positive economic news Thursday reduced pressure on the Federal Reserve to cut interest rates this month, said Colin Cieszynski, chief market strategist at SIA Wealth Management.

The nation’s businesses created 195,000 private-sector jobs in August, payroll processor ADP said Thursday. Economists polled by Econoday had forecast a gain of 150,000. Separately, U.S. government data showed the number of people who applied for unemployment benefits in the week at the end of August rose slightly, but there was no sign of rising or widespread layoffs.

Stocks extended sharp gains following a further round of positive data on activity in the U.S. services sector.

In other metals trade, December palladium PAZ19, -0.30%  fell 0.5% to $1,544.90 an ounce, while October platinum PLV19, -2.90%  fell 1.7% to $967.80 an ounce.

December copper HGZ19, +1.85%  was up 1.5% at $2.634 a pound.

MarketWatch

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