Gold futures traded lower Friday, paring their gain for the week, after upbeat comments on the outlook for a “phase one” trade deal between the U.S. and China robbed the metal of its haven appeal.
“Gold remains an excellent defensive strategy against trade tensions, resurfacing, and intensifying,” said Stephen Innes, chief Asia market strategist at AxiTrader. However, “in the absence of a definitive shift lower in Fed policy, rallies above $1480, which [are] needed to confirm a buying trend,” might be hard to come by.
Gold for December delivery GCZ19, -0.42% on Comex lost $4.90, or 0.3%, to settle at $1,468.50 an ounce, with prices for the most-active contract still managing to end about 0.4% higher for the week. December silver SIZ19, -0.63% declined 8 cents, or 0.5%, to $16.948 an ounce, to pare its weekly gain to around 0.7%.
Analysts tied Friday’s weakness to remarks by White House economic adviser Larry Kudlow late Thursday, which stoked optimism for a deal without providing much in the way of detail.
“Although investors have taken some risk off the table in recent days, the gains seen in safe haven assets appear to be contained for the time being,” said Han Tan, market analyst at FXTM, in a note. “Gold’s latest climb was capped at $1475, U.S. 10-year Treasury yields bounced off the 1.80% mark, while the Japanese yen strengthened to 108.24 versus the U.S. dollar before giving up some of its advances.”
Kudlow said at a Council on Foreign Relations event that negotiators are getting close to an agreement, but that President Donald Trump wasn’t yet ready to sign off, according to The Wall Street Journal.
Optimism over a so-called phase one agreement between the U.S. and China has waxed and waned over the past week.
Meanwhile, strength in the U.S. stock market, with three benchmark stock indexes at records Friday following a rise in October domestic retail sales, dulling demand for gold. Retail sales increased 0.3% last month, matching the forecast of economists polled by MarketWatch.
“Despite this recent bout of counter intuitive losses, gold looks strong both technically and, more importantly, from a fundamental point of view,” said Mark O’Byrne, research director at GoldCore.
“From a technical point of view, gold looks very bullish with a series of higher lows and higher highs and with the long term moving averages looking good,” he told MarketWatch. “From a fundamental point of view, global demand is strong as seen with central banks becoming net buyers and strong retail investment demand as seen in very robust demand for gold [exchange-traded funds].”
In other metals trade, January platinum PLF20, +1.06% rose 1.3% to $894.50 an ounce, ending around 0.2% higher for the week, while December palladium PAZ19, -1.82% fell 1.2% to $1,682.50 an ounce, for a weekly loss of 1.5%.
December copper HGZ19, +0.61% rose 0.6% to $2.638 a pound, but was still down 1.6% from the week-ago settlement.
The SPDR Gold Shares ETF GLD, -0.26% was down 0.2% in Friday dealings, poised for a weekly rise of 0.7%.