Gold settles lower after 4-session climb lifted prices near a 6-year high

  • Written by MarketWatch
  • Published in Economics

Gold futures settled lower on Wednesday, down from the nearly six-year high scored a day earlier, following comments from Federal Reserve chair Jerome Powell on Tuesday that analysts interpreted as less dovish than expected, along with fresh hopes for progress on U.S.-China trade talks.

“Pullback in gold is following through” after Federal Reserve Chairman Jerome Powell’s comments Tuesday afternoon that suggested there was “no inevitability of rate cut in July and later in 2019,” Jeff Wright, executive vice president of GoldMining Inc., told MarketWatch.

Also, optimistic comments by U.S. Treasury Secretary Steven Mnuchin early Wednesday regarding the U.S.-China trade dispute shifted investor attention back towards equity markets “but in my opinion, that is a wait and see catalyst,” said Wright. “We have experienced too many start and stop moments to have faith a deal is imminent.”

August gold GCQ19, -0.32%[1]  settled at $1,415.40 an ounce, down $3.30, or 0.2%. The metal finished at $1,418.70 Tuesday, the highest finish for a most-active contract since Aug. 28, 2013, according to FactSet data. On Tuesday, the contract touched its highest intraday climb since May 2013 at $1,442.90 before pulling back.

Read: Why gold prices have climbed to their highest since 2013[2]

U.S. Treasury Secretary Steven Mnuchin told CNBC[3] early Wednesday that “we were about 90% of the way there [with a trade deal] and I think there’s a path to complete this.” His comments that he was confident President Donald Trump and China’s President Xi Jinping will make inroads into the stalled talks at the weekend Group of 20 meeting in Japan, provided some buoyancy to assets perceived as risky like U.S. stocks YMU19, +0.18%[4] DJIA, +0.15%[5]  and weakening appetite for havens like gold.

Gold had started its retreat late Tuesday after Powell[6] that uncertainty about international trade policy and worries about global economic growth might be starting to show through to economic data, though Fed officials don’t know how long that may last or how severe the drag might be.

Expectations for lower interest rates among global central banks and geopolitical concerns had been making gold a preferred investment these days, especially as competing low-risk U.S. Treasury bond yields dropped. The yield on the 10-year note TMUBMUSD10Y, +2.90%[7]  fell below 2% in recent sessions.

Data Wednesday on U.S. durable goods orders showed a larger-than-expected decline of 1.3% in...

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