Gold & Silver

Gold slips as Asian equities rise ahead of Sino-US trade deal

Reuters | Updated on January 13, 2020 Published on January 13, 2020

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Gold prices fell on Monday as Asian stocks touched 19-month highs ahead of the planned signing of an interim trade deal between Washington and Beijing, which has encouraged investors to plough back into riskier assets. Spot gold dipped 0.5 per cent to $1,553.93 per ounce by 0630 GMT.

US gold futures fell 0.3 per cent to $1,555.80. Asian shares rose to new 19-month highs ahead of the Phase 1 deal due to be signed at the White House on Wednesday.

“Risk (sentiment) looks pretty good in Asia, equity inflows are coming (along) nicely, built around this trade narrative and that's depressing gold more than the global risk-on move,” Stephen Innes, a market strategist at AxiTrader, said. “There is dollar appetite in the market ... which is also depressing gold right now.”

US Treasury Secretary Steven Mnuchin said on Sunday China's commitments in the Phase-1 trade deal were not changed during a lengthy translation process and will be released this week. Further easing concerns, a Wall Street Journal report said on Saturday Washington and Beijing had agreed to semi-annual talks aimed at pushing for reforms in both countries and resolving disputes.

Gold prices gained 18 per cent last year on the backdrop of the protracted trade tussle between the world's top two economies. The dollar firmed ahead of the deal signing, making gold more expensive for buyers using other currencies.

Gold prices gained nearly 0.7 per cent last week in volatile trading amid heightened US-Iran tensions after the US killing of a top Iranian commander in Baghdad and on slower-than-expected US job growth in December. The US imposed more sanctions on Iran on Friday and vowed to tighten the economic screws if Tehran continued ”terrorist” acts or pursued a nuclear bomb.

“The precious metal, though easing off previous highs over de-escalating tensions ( US-Iran), will remain of key importance as markets stay cautious over geopolitical happenings in the current term,” Benjamin Lu, an analyst at Phillip Futures, said in a note. Spot gold is biased to break a support at $1,546 per ounce and fall towards $1,524, according to Reuters technical analyst Wang Tao.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , fell 0.9 per cent to 874.52 tonnes on Friday, their lowest since September 16. Speculators increased their bullish positions in COMEX gold contracts in the week to January 7.

Elsewhere, palladium fell 0.1 per cent to $2,114.62 an ounce. Silver was down 0.4 per cent to $18.02, while platinum slipped 0.5 per cent to $973.51.

Published on January 13, 2020
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