Gold up on weaker dollar this morning, even though the U.S.-China trade accord reduced the yellow metal’s attractiveness as an investment hedge.
The two superpowers avoided tit-for-tat tariff hikes set to go into effect Sunday after both countries said late last week that they had reached a phase-one trade agreement. The standoff between the U.S. and China propelled gold prices to the highest level in years earlier this year as the metal benefited from the risk-off trade.
But questions remain about the details of the agreement. U.S. President Donald Trump said the Chinese will make $50 billion in agricultural purchases over the next two years, a figure that some analysts have said is unrealistic.
“That scale of purchases seems implausible and Chinese officials were reluctant to mention any specific target during their press conference,” Ting Lu, chief China economist at Nomura, said in an analyst note Saturday that was quoted by CNBC.
February gold futures rose 1.1% last week to settle at $1,481.20 an ounce Friday on Comex. The U.S. Dollar Index slipped early Monday, providing some support to gold.
Hedge funds and money managers cut their bullish positions in Comex gold contracts in the week ended Dec. 10, Reuters reported, citing the Commodity Futures Trading Commission’s Commitments of Traders report.
Investors will have to ascertain the value of the risk-on trade this week after the trade accord caused the Standard & Poor’s 500 Index and Nasdaq Composite Index to edge up and close at new record highs Friday.
Meanwhile, Chinese data released Monday showed industrial production and retail sales data beat estimates, signaling a pickup in the nation’s economy, Bloomberg reported. U.S. retail sales increased less than expected last month, Reuters reported, citing Labor Department data released Friday. U.S. industrial production figures are due out Tuesday.
In other upcoming economic news, the Bank of Japan and Bank of England are both scheduled to release policy decisions on Thursday and U.S. revised GDP data are due Friday.
The end of the week also brings what historically can be a volatile trading day, known as quadruple witching. Occurring once a quarter, quadruple witching refers to the expiration on the same day of stock-index futures, stock-index options, stock options and single stock futures.
Silver gained 2.5% last week, with the March futures contract settling at $17.01 an ounce Friday on Comex. Spot platinum jumped 3.6% last week, while spot palladium increased 2.8% and was trading near a record amid supply concerns. Mines in South Africa have been plagued by the largest power blackouts in more than a decade, forcing some production cuts,
Palladium may be on track to hit $2,000 an ounce, Forbes said early Monday.
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