Gold prices fell on Tuesday as growing optimism about U.S.-China trade relations boosted risk appetite as investors awaited a speech by Federal Reserve Chair Jerome Powell this week.
Spot gold fell 0.6% to $1,920.38 per ounce by 10:47 am EDT (1447 GMT). U.S. gold futures dipped 0.5% to $1,929.00.
“We have a little optimism on U.S.-China relations, while there is some optimism regarding the coronavirus (treatment)… so, little lesser need for safe haven demand,” said David Meger, director of metals trading at High Ridge Futures.
The benchmark S&P 500 opened at a record high on Tuesday as U.S. and Chinese officials reaffirmed their commitment to a Phase 1 trade deal, adding to optimism over progress in developing treatments for COVID-19.
On Sunday, U.S. President Donald Trump hailed FDA authorization of a virus treatment that uses blood plasma from recovered patients.
Global central banks and governments have pumped in massive monetary and fiscal stimulus to prop up their virus-hit economies, which has helped bullion gain over 25% so far this year.
“The underlying fundamental pillars haven’t wavered; we’re still in the midst of the virus concerns, massive stimulus efforts that goes along with it. We can see short term pull back but we don’t see that changing the big picture,” Meger added.
Meanwhile, investors are awaiting Powell’s speech at a gathering of central bankers in Jackson Hole, Wyoming, on Thursday, where he is expected to provide further clarity on the U.S. central bank’s monetary policy stance.
Investors are looking forward to see if the Fed “will tolerate inflation and put economic growth over monetary (growth),” said Commerzbank analyst Eugen Weinberg.
Elsewhere, silver eased 0.4% to $26.44 per ounce, platinum rose 1.2% to $927.13, while palladium was down 0.3% at $2,154.60.
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