LONDON: Gold edged lower on Thursday in response to an easing of trade tensions after the United States agreed to refrain from imposing tariffs on cars from the European Union.
The two sides will also begin talks to cut other trade barriers, they announced on Wednesday following a meeting at the White House.
Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade. Spot gold slipped 0.2 per cent to $1,228.33 per ounce by 1220 GMT, after it rose 0.6pc on Wednesday. Earlier in the session, the metal hit $1,235.16, its highest in more than a week. US gold futures for August delivery were 0.3pc lower at $1,228.10 an ounce.
“The rise is partially to do with the news that Trump and the EU called a cease fire on the trade war and a halt on auto tariffs,” said Natixis precious metals analyst Bernard Dahdah. “But gold has been dropping since April so there is a bigger story behind this fall rather than just the EU-US story at the moment.”
Gold is currently trading about 10pc off its April high due to pressure from a stronger dollar, which has risen around 5pc in that time. The US currency moved sideways on Thursday.
Meanwhile, the MSCI world equity index rose to its highest since March, signalling investor demand for higher risk assets.
“The euro recovery against the greenback has also failed to lift bullion, confirming that there is little investor appetite for the precious metal at this time,” said ActivTrades chief analyst Carlo Alberto De Casa.
Among other precious metals, silver edged 0.4pc lower to $15.50 an ounce, after earlier hitting its highest since July 17 at $15.67 an ounce. Palladium dropped 0.4pc to $935 an ounce. It touched an over one-week high at $941.10 in the previous session. Platinum was down 0.1pc at $839.40 an ounce.
Published in Dawn, July 27th, 2018