Mubasher: Gold prices fell on Wednesday, as investors locked in profits, following a 1% leap in the preceding session, while political uncertainty receded in Europe and Asia, Reuters reported.
However, the flaring trade conflict between the US and China helped the yellow metal to retain its six-year high.
By 11:49 am GMT, spot gold fell by 0.71% to $1,536.08 per ounce but remained close to last week’s $1,554.56 per ounce, the highest since April 2013, while US gold futures dropped by 0.77% to $1,543.90 per ounce.
“The market is struggling to go above the $1,550 level and that’s triggering some profit taking,” Capital Economics analyst Ross Strachan was quoted by Reuters.
Investor appetite went more to riskier assets as worries about the political situation in Europe and Asia waned.
In the UK, parliament will seek to force through a law to prompt Prime Minister Boris Johnson to demand a third Brexit delay until 31 January, unless a transition deal won the approval of the lawmakers before that.
Further relief came from Asia, amidst news that Hong Kong will withdraw a bill to extradite wanted suspects to mainland China, which spurred months of protests.
In addition, positive figures on China’s services sector showing the fastest growth rate since three months, led by rising new orders and the biggest job gains since more than a year.
However, markets remained fearful about the expansion of global economy, especially with the manufacturing activity in the US posting a decline for the first time in three years, while the Eurozone factory activity extended its contraction for the seventh month in a row.
On the trade side, US President Donald Trump warned on Tuesday that he would be “tougher” on Beijing in a second presidential term as if negotiations dragged on.
A failure to ink a deal to resolve the dispute kept investors on edge, CMC Markets chief strategist Michael McCarthy was quoted by Reuters.
Lower interest rates reduce the opportunity cost of holding non-yielding metal and weigh on the US dollar.
At 11:50 am GMT, the US dollar index, which gauges the greenback against a basket six major currencies, fell by 0.34% to 98.66.
