Mubasher: Gold prices dropped on Tuesday after posting the sharpest one-day drop in two months although new trade threats by Washington curtailed hopes stoked by an agreement between the US and Mexico, Reuters reported.
At 5:51 am GMT, spot gold went up by 0.1% to $1,328.83 per ounce, while US gold futures rose by 0.3% to $1,332.90 per ounce.
However, by 9:40 am GMT, spot gold dropped by 0.42% to $1,322.44 per ounce, while US gold futures fell by 0.25% to $1,326 per ounce.
The yellow metal dived more than 1% in the prior session to a low of $1,324.50 per ounce, after markets gained support from a US-Mexico deal that averted another tariff war late last week.
While a thaw in US-Mexican trade tension dragged gold down yesterday, “it hasn’t erased concerns around the US-China talks”, Australia and New Zealand (ANZ) bank analyst Daniel Hynes was quoted by Reuters.
US President Donald Trump threatened to slap a fresh round of punitive tariffs on Chinese products, should trade talks with his Chinese President Xi Jinping at a Group of 20 (G20) summit fail to yield progress.
President Trump repeatedly said that he is set to meet with his counterpart Xi at the G20 summit due to be held on 28 and 29 June in Japan, but Beijing has yet to confirm such meeting.
This came along as Chinese foreign ministry on Monday stated that Beijing is willing to hold more talks with Washington.
While the US dollar was generally stable against other major currencies on Tuesday, a risk-taking sentiment was capped after Trump’s threat to China.
Moreover, the US president warned if a part of the deal with Mexico, that requires ratification by Mexican lawmakers, was not approved, “tariffs will be reinstated.”
By 9:47 am GMT, the US dollar index, which gauges the currency against six of its peers, steadied at 96.76.
The greenback shed more than 1.5% of its value, since clocking a two-year high of 98.371 on 23 May on the back of bets that the US Federal Reserve could cut interest rates.
“We remain cautiously constructive on gold despite Monday’s decline as we have to suspect that the trend of a lower dollar and depressed global interest rates will continue to stay in place for some time, providing gold prices with some ballast,” a note by INTL FCStone analyst Edward Meir was quoted by Reuters.