Last Updated : Jul 26, 2018 09:14 PM IST | Source: Reuters

Gold prices edge lower as U.S-EU trade concerns abate

Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade.

Gold edged lower on Thursday in response to an easing of trade tensions after the United States agreed to refrain from imposing tariffs on cars from the European Union.

The two sides will also begin talks to cut other trade barriers, they announced on Wednesday following a meeting at the White House.

Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade.

Spot gold slipped 0.2 percent to $1,228.33 per ounce by 1220 GMT, after it rose 0.6 percent on Wednesday. Earlier in the session, the metal hit $1,235.16, its highest in more than a week.

U.S. gold futures for August delivery were 0.3 percent lower at $1,228.10 an ounce.

"The rise is partially to do with the news that Trump and the EU called a cease fire on the trade war and a halt on auto tariffs," said Natixis precious metals analyst Bernard Dahdah.

"But gold has been dropping since April so there is a bigger story behind this fall rather than just the EU-US story at the moment."

Gold is currently trading about 10 percent off its April high due to pressure from a stronger dollar, which has risen around 5 percent in that time. The U.S. currency moved sideways on Thursday.

Meanwhile, the MSCI world equity index rose to its highest since March, signalling investor demand for higher risk assets.

"The euro recovery against the greenback has also failed to lift bullion, confirming that there is little investor appetite for the precious metal at this time," said ActivTrades chief analyst Carlo Alberto De Casa.

Meanwhile, the European Central Bank kept its policy unchanged on Thursday and will likely argue that the risks from a growing global trade conflict don't warrant any deviation from its plan to gradually abandon the aggressive stimulus of the last several years.

Investors are also watching out for second-quarter U.S. economic growth data, which is expected on Friday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund fell 0.29 percent to 800.20 tonnes on Wednesday.

Among other precious metals, silver edged 0.4 percent lower to $15.50 an ounce, after earlier hitting its highest since July 17 at $15.67 an ounce.

Palladium dropped 0.4 percent to $935 an ounce. It touched an over one-week high at $941.10 in the previous session.

Platinum was down 0.1 percent at $839.40 an ounce.
First Published on Jul 26, 2018 08:25 pm
Follow us on
Available On
PCI DSS Compliant