Gold Prices Slump as Trade Tensions Ease

Investing.com – Gold prices fell on Thursday as risk appetite recovered amid investor bets that recent tariff announcements by the U.S. and China are negotiating tactics and the countries will ultimately reach a compromise.

for June delivery on the Comex division of the New York Mercantile Exchange fell $10.20 or 0.75% to $1,330.00 a troy ounce by 03:30 AM ET (07:30 AM GMT).

Prices of the precious metal had rallied to a one-week high on Wednesday after China announced a fresh wave of tariffs on U.S. imports, in retaliation to a Trump administration plan to impose tariffs on Chinese products.

Worries that protectionist trade policies might result in a full blown trade war boosted safe haven demand for gold, amid fears over the impact on the global economy and U.S. growth.

But trade tensions eased after President Donald Trump’s economic adviser Larry Kudlow said late Wednesday that and added that there is not a trade war between the U.S. and China.

Market sentiment was also helped by hopes that the U.S. could reach a deal with Canada and Mexico over the .

The dollar moved higher as trade concerns eased, with the , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rising 0.31% to 107.09.

Investors seek out gold as a store of value during times of political or economic uncertainty, while a stronger dollar makes the dollar-denominated metal more expensive for holders of other currencies.

Investors were turning their attention to the latest U.S. employment report and comments by Federal Reserve Chairman Jerome Powell on Friday, which could help determine the direction of the dollar.

Signs of increasing wage growth could underline the case for the Fed to raise interest rates at a faster pace. Expectations of rising rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.

In other precious metal trade, were down 0.21% to $16.22 a troy ounce, while were down 0.52% to $913.30.

Among base metals, climbed 1.15% to $3.045 a pound, extending their rebound from the previous session’s low of $2.970. Concerns over trade tensions have pressured copper prices since the start of 2018 after they hit a nearly four-year high in December.

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