Gold price slips as investors rediscover their risk appetite

January 9, 2019

London (Jan 9)  Gold slipped for a second session on Wednesday as investors regained appetite for risk on hopes of a breakthrough in US-Chinese trade talks, while palladium hit a record high.

Spot gold was down 0.3% at $1,280.95 an ounce as of 10.32am GMT. US gold futures also shed 0.3% to $1,281.70 an ounce.

“Since gold almost hit the $1,300 mark, we have seen a recovery in the equity markets,” said Julius Bär analyst Carsten Menke. “This means that safe-haven demand is not as strong as it was around the turn of the year, and that is what is holding gold back  a little bit now.”

The metal hit a more than six-month peak of $1,298.42 an ounce last week, but improving risk-taking appetite among investors since then has weighed on the metal, often seen as a safe haven for investors in times of uncertainty.

Global equities climbed to their highest in four weeks on growing optimism that China and the US will fix their souring trade relationship.

Investors are also awaiting the release of minutes from the US Federal open market committee’s December 18-19 policy meeting at 7pm GMT for cues on future interest-rate increases.

“If growth proves to be better than investors fear — say, if the US  and China strike a truly substantive trade deal and the [US] shutdown ends relatively soon — the Fed outlook may shift back in the hawkish direction,” said DailyFX currency strategist Ilya Spivak. “That will drive yields higher, which also bodes ill for [non-yielding] gold.”

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 0.03% to 796.53 tonnes on Tuesday, but the holdings are still around their highest level since August last year.

Elsewhere, palladium rose 0.7% to $1,324.49 an ounce, having hit a record high of $1,340.50 earlier in the session. Julius Bär’s Menke said the metal, used in emissions-reducing catalysts for vehicles, was being helped by signs of improvement in trade talks and news that China was “considering another stimulus programme for the car market”.

Silver fell 0.2% to $15.63 an ounce, while platinum gained 0.9% at $821.90.


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