(Oct 31): Gold steadied near US$4,000 an ounce as traders weighed a US-China trade truce that failed to quash concerns about long-term competition between the world’s two largest economies.
Spot gold pared losses on Friday after earlier declining as much as 0.9%. Chinese leader Xi Jinping warned against “breaking supply chains” in his first public remarks after a landmark meeting with US President Donald Trump that secured a one-year trade truce between the nations.
Talks between the two leaders appeared to resolve — for now — months of brinkmanship, but a one-year pause is likely only to stabilise relations while buying each side time to reduce strategic dependence. The détente also underscored the rise in China’s economic clout since Trump’s first term as US president, a shift that is fuelling interest in haven assets.
Bullion is headed for a second weekly drop and is down more than 8% from a record high above US$4,380 on Oct 20. The retreat has most recently been aided by reduced expectations of further Federal Reserve rate cuts. Chair Jerome Powell warned that investors should rein in hopes for a December reduction after a quarter-point cut on Wednesday.
Outflows from gold-backed exchange-traded funds (ETFs) have also removed some of the support that underpinned the scorching rally. Total gold ETF holdings fell for six days before recording net inflows on Thursday, according to data compiled by Bloomberg.
A “combination of a hawkish cut, a truce in the US-China trade war, plus heavy outflows from the gold ETFs are all adding to the corrective mood,” said Robert Rennie, a commodities analyst at Westpac Bank Corp. Bullion could drop back to around the US$3,750 level, he said.
See also: Lion Global launches Singapore’s first physical gold fund with min. investment amount of $1
Despite its recent pullback, gold has still advanced more than 50% this year, with support from a push by mainstream investors to safeguard their portfolios against risk as well as accelerated central-bank buying, the World Gold Council said in a report on Thursday. Central banks purchased 28% more gold in the third quarter than during the preceding three months, reversing a downward trend seen earlier this year.
Spot gold fell 0.2% to US$4,017.27 an ounce as of 11.23am in New York on Friday. The Bloomberg Dollar Spot Index rose 0.2%. Silver and palladium edged higher while platinum fell.
Uploaded by Felyx Teoh
