Online Reporter
Gold wavered around $4 000 an ounce as traders weighed a US-China trade truce that failed to quash concerns about long-term competition between the world’s two largest economies.
Spot gold fell as much as 0.8 percent on Friday, after climbing 2,4 percent in the previous session to halt a four-day losing streak.
Chinese leader Xi Jinping called for stable supply chains in his first public remarks after meeting with US President Donald Trump.
Talks between the two leaders appeared to resolve – for now – months of brinkmanship, but a one-year pause is likely only to stabilse relations while buying each side time to reduce strategic dependence.
The détente also underscored the rise in China’s economic clout since Trump’s first term as US president, a shift that is fuelling interest in haven assets.
Bullion is headed for a second weekly drop and is down around 9 percent from a record high above $4 380 on October. 20.
The retreat has most recently been aided by reduced expectations of further Federal Reserve rate cuts.
Chair Jerome Powell warned that investors should rein in hopes for a December reduction after a quarter-point cut on Wednesday.
Outflows from gold-backed exchange-traded funds have also removed some of the support that underpinned the scorching rally: Total gold ETF holdings fell for six days through Wednesday, the longest streak of declines since April, according to data compiled by Bloomberg.
A “combination of a hawkish cut, a truce in the US-China trade war, plus heavy outflows from the gold ETFs are all adding to the corrective mood,” said Robert Rennie, a commodities analyst at Westpac Bank Corp. Bullion could drop back to around the $3,750 level, he said.
Despite its recent pullback, gold has still advanced more than 50 percent this year, with support from a push by mainstream investors to safeguard their portfolios against risk as well as accelerated central-bank buying, the World Gold Council said in a report on Thursday. — Bloomberg
