Gold Steadies After Biggest Loss in a Month on Trade Optimism

On Tuesday, President Xi Jinping stressed China’s commitment to the global trading order as his negotiators wrangle with the U.S.

Krystal Chia

06 Nov 2019, 02:13 PM IST

Gold Steadies After Biggest Loss in a Month on Trade Optimism

A stack of one kilogram gold bullion bars sit inside a vault in Germany. (Photographer: Michaela Handrek-Rehle/Bloomberg)

(Bloomberg) -- Gold steadies after posting the biggest loss in more than a month as investors weighed the strength of the global economy and prospects for a U.S.-China trade deal.

In a speech on Tuesday, President Xi Jinping stressed China’s commitment to the global trading order as his negotiators wrangle with the U.S. over rolling back punitive tariffs ahead of an initial deal. News that U.S. service industries expanded more than forecast in October triggered a brief equity rally on Wall Street, but pushed market pricing for another rate cut from the Federal Reserve further out.

Drivers
People familiar with the trade deliberations say Beijing has asked the Trump administration to pledge not only to withdraw threats of new tariffs but also to eliminate duties on about $110 billion in goods imposed in September. U.S. trade with China nosedived in September after President Donald Trump escalated the trade war with fresh tariffs on consumer items, deepening a slump for exporters on both sides of the Pacific. U.S. job openings unexpectedly slumped in September to the lowest level in a year and a half on broad declines across industries, another sign of moderating yet still-strong hiring. A wave of interest-rate cuts by central banks including the Federal Reserve and mounting hopes of a U.S.-China trade deal are buoying confidence in financial markets just as key economic indicators show signs of stabilization after recent declines. ETF holdings backed by gold are at the highest since 2013 after posting a modest rise last week. The stockpile has risen every week since August, apart from a single weekly drop in September.

Drivers

People familiar with the trade deliberations say Beijing has asked the Trump administration to pledge not only to withdraw threats of new tariffs but also to eliminate duties on about $110 billion in goods imposed in September.
U.S. trade with China nosedived in September after President Donald Trump escalated the trade war with fresh tariffs on consumer items, deepening a slump for exporters on both sides of the Pacific.
U.S. job openings unexpectedly slumped in September to the lowest level in a year and a half on broad declines across industries, another sign of moderating yet still-strong hiring.
A wave of interest-rate cuts by central banks including the Federal Reserve and mounting hopes of a U.S.-China trade deal are buoying confidence in financial markets just as key economic indicators show signs of stabilization after recent declines.
ETF holdings backed by gold are at the highest since 2013 after posting a modest rise last week. The stockpile has risen every week since August, apart from a single weekly drop in September.

Prices
Spot gold +0.2% to $1,486.71/oz after -1.7% on Tuesday, the most since Sept. Spot silver +0.3% after two days of declines Platinum steady at $928.48/oz; palladium -0.3%

Market Commentary
“If you use the gold/oil ratio as a proxy for market sentiment, then it’s risk on,” Shaw and Partners Ltd. said in a report Wednesday.

To contact the reporter on this story: Krystal Chia in Singapore at kchia48@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Keith Gosman, Jake Lloyd-Smith