Gold prices ended lower on Thursday as President Donald Trump’s tweet that a trade deal with China is near rallied the stock market, dulling demand for the haven metal.
Gold prices had been trading higher early Thursday, with uncertainties surrounding a U.K. election and dovish stances by the Federal Reserve and the European Central Bank helping to provide support.
On Thursday morning, however, Trump tweeted : “Getting VERY close to a BIG DEAL with China. They want it, and so do we!”
The tweet helped to lift the S&P 500 stock index to new all-time highs, Michael Armbruster, managing partner at Altavest, told MarketWatch. “In effect, gold is reacting to Trump’s tweet just as the U.S. stock market is reacting, but in opposite directions.”
February gold /zigman2/quotes/210035396/delayed GCG20 -0.26% fell by $2.70, or 0.2%, to settle at $1,472.30 an ounce, down significantly from the day’s high of $1,491.60.
March silver /zigman2/quotes/210316162/delayed SIH20 -0.46% added 10 cents, or 0.6%, at $16.949 an ounce, after a 0.9% gain on Wednesday. The metal notched a fourth consecutive gain.
Trump’s tweet was “just a distraction from impeachment hearings,” said Jeff Wright, executive vice president of GoldMining Inc., as there is “no real progress” toward a trade deal.
Still, U.S. producer-price index and weekly jobless claims data were “more substantive” to support higher gold and “this could/should follow through in coming days [as] implied U.S.-China trade discussions continue but with no real progress to show for it,” he said.
A weekly measure of those seeking unemployment benefits rose more than expected. Initial jobless claims jumped 49,000 to a seasonally adjusted 252,000 in the first week of December, the government said Thursday. That is the highest level since September 2017, but the data was likely distorted by the Thanksgiving holiday in late November.
Separately, the U.S. producer-price index was unchanged last month, the government said Thursday, compared with economists’ consensus estimates polled by MarketWatch for a 0.2% increase.
The ECB earlier decided to keep its deposit rate at -0.5% and its asset purchase program unchanged at 20 billion euros a month.
Europe’s central bank moves follow the Fed, which on Wednesday kept interest rates on hold, as expected, at a range between 1.50% to 1.75% and signaled that interest rates would stay lower for longer. He said it would take a sustained increase in inflation to shift the interest rate trajectory higher.
That backdrop gave gold a boost in early Thursday trading.
“Less chance of higher rates and a weaker dollar combined to make gold a more attractive investment, particularly for non-dollar-denominated investors, Marshall Gittler, investment strategy consultant at financial services firm BDSwiss.group, told MarketWatch.
Precious commodities like gold and silver also have benefited from U.S.-China trade tensions and doubts about the outcome of the U.K.’s general election on Thursday. Prime Minister Boris Johnson’s Conservative party leads in recent polling but his advantage over the rival Labour Party amid worries that the race between the Conservatives and the Labour Party has narrowed, casting some uncertainty on Britain’s plan to exit from the European Union.
Meanwhile, a Reuters report indicated that a much-hoped-for partial trade pact between Washington and Beijing isn’t close to coming to fruition, ahead of a Sunday deadline for an increase in some $160 billion in China goods.
Among other metals, March copper /zigman2/quotes/210055491/delayed HGH20 -1.58% added 0.3% to $2.7965 a pound. January platinum /zigman2/quotes/210262118/delayed PLF20 -0.30% rose 0.6% to $944.80 an ounce.
Palladium futures, meanwhile, notched a fresh record following reports that recent power outages in South Africa cut mine production.
March palladium /zigman2/quotes/210239659/delayed PAH20 +1.58% added 1.5% to settle at $1,914.20 an ounce after trading as high as $1,919.90. The settlement and intraday high were the highest for a most-active contract based on records dating back to November 1984, according to Dow Jones Market Data.