Gold drops the most in a year after the US and China agree to restart stalled trade negotiations. Reuters
Gold drops the most in a year after the US and China agree to restart stalled trade negotiations. Reuters
Gold drops the most in a year after the US and China agree to restart stalled trade negotiations. Reuters
Gold drops the most in a year after the US and China agree to restart stalled trade negotiations. Reuters

Gold drops the most in a year as US and China pause trade war


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Gold opened the third quarter with a slump back below $1,400 for a benchmark amount of 28 grams after the US and China agreed to a truce in their trade war, dealing a blow for now to havens that were bolstered in recent months by the long-running tensions as well as prospects for looser monetary policy.

Prices fell after Presidents Donald Trump and Xi Jinping’s meeting over the weekend, at which the leaders of the two largest global economies agreed to resume negotiations. Still, the setback may be temporary as investors now train their focus on US jobs data due on Friday for clues on the Federal Reserve’s next move on policy.

Bullion hit a six-year high last week as the trade war dragged on, top central banks including the Fed adopted a more dovish tone, and tensions spiked between the US and Iran. Driven by speculation that US interest rates may soon be headed lower, investors ploughed into bullion-backed exchange-traded funds, which swelled 5 per cent in June, the most since 2016.

“Certainly this morning, we’re seeing some weakness,” Daniel Hynes, commodity strategist at Australia and New Zealand Banking Group, said. “But I do think the outlook for rates in the US in particular has been a real driving force. So we’re quite positive toward gold, we think this abatement in the US dollar strength and potential rate cuts in the near term will certainly continue to boost investment demand.”

Spot gold dropped as much as 1.8 per cent, the biggest intraday fall in a year, to $1,384.06 for 28 grams, and was at $1,391.32 at 10.36am in Singapore on Monday. Prices hit $1,439.21 on June 25, the highest since 2013, and rallied 8 per cent last month. A gauge of the US dollar rose 0.1 per cent on Monday after sagging 1.6 per cent in June.

After meeting Mr Xi, Mr Trump said he would hold off imposing additional tariffs on Chinese imports and delay restrictions against Huawei Technologies, letting US companies resume sales to China’s largest telecommunications equipment maker. Further details on the deal were light though, and markets are still pricing in an interest rate cut at the Fed’s policy meeting this month.

In other precious metals, spot silver fell 0.8 per cent, platinum lost 0.1 per cent and palladium was 0.2 per cent higher.

UAE currency: the story behind the money in your pockets
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How to watch Ireland v Pakistan in UAE

When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.

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UAE currency: the story behind the money in your pockets
While you're here
The Pope's itinerary

Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport


Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial


Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport