Gold prices settled lower on Monday, pressured as a broad rally in global stocks on the back of progress in U.S.-China trade negotiations drew investor interest away from the precious metal.
Gold has seen “a little profit-taking from the past few weeks along with a continued appetite for additional equity risk in the broader U.S. market,” said Jeff Wright, executive vice president of GoldMining Inc. “The current feeling and signal of an imminent U.S.-China trade agreement is contributing, but not a decisive factor given Chinese interest in physical gold,” which can be supportive of prices for the metal.
Futures for April delivery GCJ9, +0.02% lost $3.30, or 0.3%, to settle at $1,329.50 an ounce, after gold on Friday booked a 0.8% weekly rise. March silver SIH9, +0.03% shed 8.4 cents, or 0.5%, at $15.83 an ounce, after that metal logged a 1.1% weekly advance.
President Donald Trump late-Sunday signaled that he would be inclined to extend a March deadline for increasing tariffs, citing “substantial progress” in talks between Beijing and Washington, intended to resolve longstanding trade differences between the world’s largest economies.
The bull camp for gold “might hold out hope that gold’s ability to hold up at the end of last week, in the face of ‘euphoria’ toward the trade deal, is a sign that it could shift its focus away from the ebb and flow of the dollar and toward classic physical demand,” analysts at Zaner Precious Metals wrote in a daily note.
The trade developments, however, triggered some appetite for risk across the globe, with the Shanghai Composite Index SHCOMP, -0.67% closing up 5.6% on Monday, representing that index’s best daily gain in three years. Meanwhile, the Dow Jones Industrial Average DJIA, +0.23% and the S&P 500 index SPX, +0.12% also were headed higher.
Gold, viewed as a haven asset, tends to decline when stock rise. The precious metal’s Monday decline may also have been somewhat offset by the fact that China is one of the world’s largest buyers of commodities, including gold, and progress on tariff talks can be viewed as supportive for the natural resources complex.
The dollar was also trading little changed, with the ICE U.S. Dollar Index DXY, +0.02% almost flat at 96.495. Earlier losses for the index had offered some support for dollar-denominated gold.
After falling for the Federal Reserve’s “line that it would keep raising interest rates in 2019, the interest-rate market now says it won’t even raise once by this time next year,” said Adrian Ash, director of research at BullionVault. If Fed Chair Jerome Powell “says anything more hawkish when he goes to Congress midweek, the dollar could find its feet to knock back gold.” Powell’s testimony to Congress begins Tuesday.
Meanwhile, commodity investors were also watching merger news ion the gold complex, as Barrick Gold Corp. ABX, -3.09% on Monday brought forth a hostile all-share merger with Newmont Mining Corp. NEM, -1.04% a move that could create a mining giant that would be valued, at current market prices, at around $42 billion. Newmont management, however, so far has rejected Barrick’s overtures, setting up a battle between the world’s largest gold companies.
Among other metals Monday, palladium futures extended their run to a fresh record. March palladium PAH9, +1.38% added 2.4% to $1,496.50 an ounce. It’s sister metal, platinum, saw its April contract PLJ9, +0.76% edge up by 0.9% to $853.60 an ounce.
Copper futures on Monday finished slightly lower, but continue to hold an impressive year-to-date gain of nearly 12%. March copper HGH9, -0.12% fell 0.2% to $2.945 a pound.
“Copper has outperformed other base metals due to the potential for growth in the usage of copper or intensity related to the higher penetration of electric vehicles into the global market,” said Joe Mazumdar, co-author at Exploration Insights. “Also, copper mine supply is constrained and smelter disruptions over the past year have reduced the amount of copper cathode available.”