November 8, 2019 / 11:32 AM / 4 days ago

PRECIOUS-Gold set for biggest weekly drop in 3 years on trade optimism

(Adds comments, updates prices)

* Holdings in SPDR Gold fell 0.16% on Thursday

* Gold hits lowest level since Aug. 5 at $1,455.80/oz

* Silver set for steepest weekly fall since October 2016

By Eileen Soreng

Nov 8 (Reuters) - Gold prices fell on Friday and were on track for their biggest weekly decline in almost 3 years as a stronger dollar weighed, while optimism around U.S.-China trade talks dented bullion’s safe-haven appeal.

Spot gold was down 0.6% at $1,458.52 per ounce at 1309 GMT, poised for its biggest weekly drop - about 3.7% - since November 2016. Prices earlier fell to their lowest since Aug. 5 at $1,455.80.

U.S. gold futures fell 0.5% to $1,459.70.

“There’s expectation for resolution of the trade war and that is the main story behind this fall in gold,” said Carlo Alberto De Casa, chief analyst at ActivTrades.

A risk-on scenario, stronger dollar and Thursday’s breakdown of the key support level of $1,480 also weighed on bullion as many traders were looking at gold in a $1,480-$1,520 trading range, De Casa said.

Gold fell below its 100-day moving average for the first time since end-May on Thursday.

The dollar index was headed for a weekly gain as it benefited from news that China and the United States had agreed to roll back tariffs as part of a potential preliminary pact to end their trade war.

Meanwhile, uncertainty about the fate of trade talks nudged world stock markets off 21-month highs on Friday after what has proved to be a stellar week for risk assets.

An agreement between the two giant economies to roll back existing tariffs as part of a ‘phase one’ trade deal faces fierce internal opposition at the White House and from outside advisers, sources familiar with the talks told Reuters.

“We are trading on a lot of speculation right now and there’s no solid evidence or anything specific,” said Craig Erlam, OANDA senior market analyst, adding gold could move back to $1,440 if a ‘phase 1’ trade deal were signed next month.

Reflecting sentiment, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, dipped 0.16% to 914.38 tonnes on Thursday.

“While subdued global economic growth and low interest rates should keep gold prices elevated, positive developments for gold have now largely played out,” analysts at Capital Economics said in a note.

Elsewhere, silver dropped 1.9% to $16.78 per ounce, and was set to fall more than 7% for the week, its steepest drop since October 2016.

Platinum fell 1.8% to $892.32 per ounce, poised for a 5.6% drop for the week.

Palladium lost 1.3% to $1,777.67 and was headed for a weekly decline after rising for four weeks. (Reporting by Eileen Soreng in Bengaluru; Editing by Dale Hudson and Chizu Nomiyama)

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