Gold off highs as dollar holds onto gains, investors focus on U.S.-China trade talks
Gold prices declined, hovering away from all time peak hit in the prior session as the dollar held onto gains made after better-than-expected U.S. payrolls data, while investors kept a close eye on U.S.-China relations ahead of scheduled trade talks.
Spot gold was trading lower at $2,034.24 per ounce by 0919 GMT, having hit an all-time high of $2,075.28 on Friday. U.S. gold futures rose 0.8 percent to $2,033.90.
The safe-haven metal retreated from record high and closed nearly 1.4 percent lower in the previous session as the dollar bounced following the release of U.S. nonfarm payrolls.
Data released on Friday showed, the U.S. nonfarm payrolls increased by 1.763 million jobs last month after a record 4.791 million in June, while the unemployment rate fell to 10.2 percent from 11.1 percent in June.
The dollar was also supported by flare-ups in tensions between Washington and Beijing. Last week, U.S. President Donald Trump signed two executive orders banning WeChat, owned by Chinese tech giant Tencent, and ByteDance’s video-sharing app TikTok in 45 days’ time while announcing sanctions on 11 Chinese and Hong Kong officials
Gold’s appeal as a safe haven has been underpinned by the uncertainty on whether U.S. policymakers can agree a new package of fiscal support for the virus-hit economy. On Sunday, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin said they were open to restarting COVID-19 aid talks, after President Trump signed a series of executive orders to extend unemployment benefits.
The orders would provide an extra $400 per week in unemployment payments, less than the $600 per week passed earlier in the crisis.
Moreover, signs of a recovery in industrial activity in the Chinese economy also boosted market risk sentiment. China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels.
The greenback against a basket of currencies traded 0.1 percent up at 93.52, having touched a low of 92.52 on Thursday, its lowest since May 2018. The U.S. Treasury yields edged lower, with the benchmark 10-year note yield trading at 0.560 percent.
Investors now await trade talks between U.S. and China scheduled for August 15 and also the United States consumer prices on Wednesday and retail sales on Friday, which is expected to show a solid bounce in spending.