Gold headed for the biggest weekly fall in more than two years as developments in U.S.-China trade talks battered appetite for buying and sent tumbling miner stocks.
This week's spot bullion is 3 percent lower, the most since May 2017, after prices dropped late Thursday as Washington and Beijing moved closer to a phase-one deal. Other precious metals also plummeted, falling 6.1 million from Monday for gold.
The uncertainty created by the trade dispute, interest rate reductions from the Federal Reserve, and high demand from traders and central banks supported gold prices this year.
This trio of economic triggers is now under threat as the two largest economies move to an original agreement, with the sides committing to a rollback tariff as part of any contract.
"The main driver behind the gold weakness has been growing enthusiasm about the prospects for trade," said John Sharma, an economist at the National Australia Bank Ltd.
The probability of a U.S.-China phase one contract, growing bond yields, and rising risk-on climate has further dented the precious metal's allure, he added.
"It should be noted, though, that the trade deal is not done and dusted," he pointed out, while a number of unresolved issues also exist, which will provide some protection for the yellow metal.
Leaders in the U.S. government are resistant to the rollback of tariffs because, even if this agreement is to go forward, the more difficult issues exist, he added, such as Huawei Technologies Co. and intellectual property.
After tumbling 1.6 percent on Thursday, gold for immediate delivery stood at $1,468.95 an ounce at in the final session of the week. This year, gold remains 16 percent higher.
The losses of the week were exacerbated by reports that last month China's central bank, which had been a steady bullion accumulator since the end of 2018, refused to re-add stocks.
The fall in gold prices led the stocks of miners to crash. Newcrest Mines Ltd. fell 4.5 percent in Australia, Northern Star Resources Ltd. declined more than 6 percent, and Evolution Mining Ltd. retreated 5.7 percent, the highest since February 2017. In Hong Kong, Shandong Gold Mining Co. fell 3 percent.
There are some positive news about the trade war, but the company said they had those news a lot of time and have not made any follow-up action after that. "Knowing what the next phase in these talks is very crucial," said Chirag Sheth, a specialist at London-based Metals Focus Ltd, said.
