Gold slipped to more than one-week low on Tuesday as strength in equities markets and hopes for a smooth the signing of the U.S.-China Phase 1 trade deal tarnished bullion’s a safe-haven appeal, while palladium hit a record high.
“As long as stocks continue to make these record highs, there is no real need for the insurance policies you’ll find in gold,” Saxo Bank analyst Ole Hansen said.
“We have the signing of the trade deal … we are probably not going to see anyone rocking the boat at this stage, but nevertheless, it will give the market an opportunity to read the text and see what’s in the deal.”
Only a day before the Phase 1 trade deal signing, the U.S. Treasury on Monday dropped China’s designation as a currency manipulator, fueling market optimism.
Global equities are at record highs, but the tide turned at the opening of European markets as traders took profits ahead of the trade deal.
Bullion rose to its highest in nearly seven years last week on worries over the potential military conflict between the United States and Iran, but the rally faded in the absence of any further escalation in tensions. Analysts said investors are still taking some profits after
the massive spike in prices.
“That has also been noted in the exchange-traded funds market, where there have been some quite sizeable reductions since we reached that high,” Saxo Bank’s Hansen said. Also, on investors’ radar was the Fed’s Beige Book, a summary of commentary on economic conditions, due on Wednesday.
Palladium hit a record high of $2,155.01 an ounce and was on track for a ninth straight session of gains, supported by a sustained supply deficit. The metal widely used in catalytic converters in automobile exhaust systems was up 0.9% at $2,151.71.
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