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Gold prices gave up earlier gains on Tuesday to finish lower for a third consecutive session, pressured by strength in the dollar, a day ahead of the release of minutes from last month’s Federal Reserve meeting.
Prices had climbed in earlier dealings, on doubts about a near-term resolution between the world’s largest economies, which weighed on assets perceived as risky and fed appetite for haven assets, including bullion.
Jeff Wright, executive vice president of GoldMining Inc., attributed the pullback in gold prices to “short term trading swings [and] profit taking for some traders buying the dip.”
December gold GCZ19, +0.10% on Comex fell by 50 cents, or 0.03%, to settle at $1,503.90. an ounce, after shedding 0.6% on Monday. December silver SIZ19, +1.00% added 16 cents, or 0.9%, to $17.70 an ounce, after losing 0.5% in the previous session.
The move lower in gold by the settlement came as the ICE U.S. Dollar Index DXY, +0.23% climbed by 0.2% to 99.171, back to their highest levels since April 2017. A stronger dollar tends to pressure dollar-denominated gold prices.
So-called safe-haven assets had found support after Washington expanded its list of blacklisted Chinese firms to 28 entities ahead of U.S.-China trade talks this week, increasing doubts that a comprehensive Sino-American trade agreement can be sketched out as delegates meet this week.
“Upcoming China talks are deemed even more uncertain now,” said George Gero, managing director at RBC Wealth Management. “Everywhere investors look around the globe they find reasons for worry and owning gold is one of the answers.”
‘Everywhere investors look around the globe they find reasons for worry and owning gold is one of the answers.’
Vice Premier Liu He is set to visit Washington on Oct. 10-11 ahead of an increase in tariffs on some $250 billion worth of Chinese imports to 30% from 25%. Both sides have tempered hopes that negotiations will be fruitful, with news reports suggesting Chinese officials want to take certain issues like state subsidies off the table.
“Where the metal concludes this week will be heavily influenced by high-level trade talks between the United States and China,” wrote Lukman Otunuga, senior research analyst at FXTM, in a daily research note.
“A market friendly outcome that paves the way to further negotiations could send Gold prices sinking towards the $1485 level. Alternatively, if the negotiations disappoint markets and fuel risk aversion, Gold bulls should be injected with enough confidence to challenge $1515 and $1525,” he wrote.
On the data front, a reading of U.S. producer prices for September fell by 0.3%. That was the steepest decline since the first month of the year and the data point to low inflation ahead, which gives the Federal Reserve room to cut interest rates to try to guard the economy from damage related to the ongoing trade war with China.
Elsewhere on Comex, December copper HGZ19, -0.39% lost 0.3% at $2.5685 a pound, January platinum PLF20, +0.62% rose 0.2% to $890.10 an ounce, while December palladium PAZ19, +0.34% added 0.3% to $1,650.70 an ounce.
The SPDR Gold Shares exchange-traded fund GLD, +0.48% added 0.4%.
The World Gold Council reported Tuesday that global gold-backed ETFs reached their highest levels of all-time, adding 75.2 metric tons in September to a total of 2,808 metric tons.