Gold futures settled lower Wednesday, pulling back from a nearly one-month peak a day earlier, after a statement that Beijing-Washington trade talks were advancing dulled investors' appetite for gold.
Just a day ago, US President Donald Trump indicated that a limited settlement could be postponed until after the presidential election in 2020. "From every trading story, gold prices continue to trade," Oanda's senior market analyst Edward Moya said.
Early on Wednesday, Bloomberg News reported that a Sino-American trade pact was about to come to fruition and that more information on a gradual roll-back of import duties was being negotiated, despite recent rhetoric indicating that strains between the two economic superpowers are inflaming.
Highest settlement
Gold for February delivery on Comex lost $4.20, or 0.3 percent, to settle at $1.480.20 per ounce, after jumping 1 percent on Tuesday to the highest settlement for the most active contract since November 6, according to FactSet data.
March silver, however, fell 33.2 cents, or 1.9 percent, to end at $16.916 an ounce, after a 1.7 percent increase in the previous session.
The latest reports come as Trump said Tuesday it might be better to hold off until after the presidential race in November 2020 on reaching a long-awaited U.S.-China trade deal. Economic trends come ahead of a deadline on Dec. 15 to enforce fresh import tariffs on China.
The precious metal has lately gained from lower government debt rates, such as the 10-year Treasury Note which experienced the highest one-day fall since Tuesday, Aug. 1, and US dollar softness, as calculated by the ICE U.S. Dollar Index DXY.
Slide continues
Lower rates can reduce the cost of owning gold as opposed to the perceived security of government paper, and a weaker US currency can make any dollar-sized bullion more attractive to buyers using other currencies.
Gold continued its decline despite some disappointing U.S. data, according to payroll processor ADP, with U.S. private sector employment rising by 67,000 jobs in November- the smallest increase since May. The survey of ISM services fell from 54.7 to 53.9 in November.
Nonetheless, the uncertainty surrounding a trade deal has cooled the appetite of gold bulls, even in the face of Wednesday's optimism.
According to Stephen Innes, AxiTrader's chief Asian market strategist, in a Wednesday report, the yellow metal still offers the cheapest hedge against a significant decline in equity markets and, given the responsive nature of the central bank, "it makes sense to switch the rate cut lever."
