Picture: BLOOMBERG
Picture: BLOOMBERG

Bengaluru — Gold prices edged down to a one-week low on Monday after the US and China expressed willingness to sign an initial trade deal by the year-end, lifting demand for riskier assets and boosting the dollar.

Spot gold was down 0.1% to $1,461.24 per ounce by 5.35am, having fallen to its lowest since November 18 earlier in the session. US gold futures were down 0.2% to $1,461.

“Trade optimism is sending global equities higher and capital is fleeing away from safe havens into risk assets,” said Margaret Yang Yan, a market analyst at CMC Markets.

Upbeat headlines about trade talks between Washington and China helped Asian shares regain footing, while the dollar rose against a basket of rivals, making the non-yielding bullion expensive for holders of other currencies. The US currency rebounded strongly on Friday after a survey showed the US manufacturing output accelerated in November and services activity picked up more than expected.

“US economic data has shown signs of stabilisation recently … also consensus is that the global slowdown is going to bottom in the first quarter of next year and then start to rebound,” Yan said.

Gold, considered a safe asset in times of political and economic uncertainty, has gained over 13% this year, mainly due to the long drawn-out tariff dispute and concerns over slowing global growth. Limiting bullion’s downside, investors were still cautious with US and Beijing officials saying an ambitious “phase two” trade deal looked less likely.

“The market is in an extended period of consolidation at the bottom of the recent range, waiting for the next major catalyst to emerge,” AxiTrader market strategist Stephen Innes said in a note. “US economic data will likely factor a lot into gold traders’ decision making into year-end as will the ebb and flow of trade talks. But ultimately, it’s all about the [US Federal Reserve] Fed policy, US interest rates and the dollar.”

Lower interest rates reduce the opportunity cost for holding the non-yielding bullion. Hedge funds and money managers increased their bullish positions in Comex gold and silver contracts in the week to November 19, data showed.

Elsewhere, silver shed 0.3% to $16.94 per ounce, after touching its lowest in a week. Palladium rose 0.7% to $1,787.87 per ounce, its highest since November 8, and platinum gained 0.4% to $894.85. 

Reuters