Melted gold flows out of a smelter into a mould of a 1kg bar at a plant of gold refiner and bar manufacturer Argor-Heraeus in the southern Swiss town of Mendrisio in 2008. Picture: REUTERS/ARND WIEGMANN
Melted gold flows out of a smelter into a mould of a 1kg bar at a plant of gold refiner and bar manufacturer Argor-Heraeus in the southern Swiss town of Mendrisio in 2008. Picture: REUTERS/ARND WIEGMANN

Bengaluru — Gold prices fell on Friday as risk appetite was whetted by comments from White House economic adviser Larry Kudlow that the US is nearing an interim trade pact with China.

Spot gold declined 0.4% to $1,465.77/oz at 4.15am GMT, but was still set to rise more than 0.5% this week. US gold futures were down 0.5% at $1,466.30/oz.

Asian stocks jumped, denting bullion’s safe-haven appeal, tracking a record S&P 500 finish, as hopes revived that the world’s top two economies were nearing a phase one deal. Kudlow said on Thursday, an agreement could come soon.

Ilya Spivak, a senior currency strategist at DailyFx, said the optimism for the trade deal and a bit of technical resistance at these levels is weighing on gold. Gold prices have gained more than 14% in 2019 as the on-again, off-again trade spat has roiled financial markets and prompted fears of a global economic slowdown. A Reuters poll of economists showed a permanent truce is unlikely in the coming year, and, while concerns have eased about a US recession, an economic rebound is also not expected soon.

Risks associated with the political and economical issues like Brexit, Hong Kong and the trade talks are “too great for something not to go wrong,” Spivak said, adding these risks will put a floor under gold prices and if something goes really wrong then prices will go higher.

In Hong Kong, antigovernment protesters paralysed parts of the financial hub for a fifth day.

Investors are now awaiting the US retail sales and industrial production data for the previous month, expected later in the day. Spot gold may bounce a bit further to $1,478/oz before resuming its downtrend, according to Wang Tao, Reuters market analyst for commodities and energy technicals.

Among other precious metals, silver was down 0.4% to $16.95/oz and was en route to rise 0.9% this week, while platinum fell 0.4%, to $876.81/oz and was set to register a weekly decline of 0.8%. Palladium gained 0.2% to $1,741.23/oz.

Reuters