Gold prices have recorded their biggest weekly loss in more than two years, especially with the emergence of market satisfaction from the progress of trade talks between the two most important economies in the world, China and the United States, after a trade war broke out about two years ago. The huge demand for safe haven currencies began to decline shortly afterwards.
Spot bullion has fallen 3% this week, its biggest drop since May 2017. This comes after an initial agreement was reached on Thursday and the US and China are drawing closer to a trade pact. In addition to gold prices fell some other precious metals such as silver, which fell by 6.1 & since the beginning of the week’s trading on Monday.
Gold prices have faced significant moves in 2019, influenced by the global trade crisis between America and China, and also affected by the Federal Reserve’s interest rate cuts as well as strong demand from investors and central banks. These three factors will soon be affected, especially as the world’s two largest economies come close to the initial agreement, which began with both sides agreeing to drop tariffs on their goods as part of the deal. Meanwhile, the US Federal Reserve recently noted that after three interest rate cuts, monetary policy makers will stop taking further action for the time being.
“Haven buying dried up amid the risk-on tone in markets,” the Australian and New Zealand Banking Group Limited said in its report, noting that gold bullion slumped around $20 on Thursday in a very short time. The group said the move towards tariffs between the two countries would be a “significant breakthrough for negotiations”.
After prices fell 1.5% on Thursday, gold prices for immediate delivery stabilized in the last session of this week to $1,468 an ounce. But it is still 14.5% higher than the price it reached this year.
The week’s losses were compounded by news that China’s central bank, which has been a steady pool of bullion since late 2018, failed to add more inventories again last month.