COMEX gold trades weaker near $1340/oz after a 1% slide in previous session. Gold hit a 1-month high near $1356/oz this week but retreated on gains in US dollar, prospect of deal between US and China and easing geopolitical tensions.
The US dollar index trades near 89.4 levels after a 0.4% gain yesterday. The yen weakened against the US dollar on prospect of a deal between US and China and possibility of diplomatic solution to North Korea’s nuclear issues. However, weighing on US dollar is drop in bond yields and mixed US economic data.
US Treasury Secretary Steven Mnuchin and his Chinese counterpart have been discussing a mutually agreeable way to reduce the trade gap and help China avoid tariffs on $50 billion of exports to the US. Chinese Premier Li Keqiang said China will work toward resolving issues via dialogue and negotiations, but is also prepared for responses. Meanwhile, the Trump administration is mulling a crackdown on Chinese investments in technologies the US considers sensitive.
Geopolitical tensions eased as China confirmed Wednesday that North Korean leader Kim Jong Un met with President Xi Jinping on a surprise visit to Beijing – the latest in a series of diplomatic meetings pointing towards a reduction in tensions.
Weakness in equity markets has however lent support to gold price. Asian equity markets are trading largely lower today after losses in US market yesterday. Sell-off in technology shares led the sell-off in US market.