Gold prices dropped Thursday, posting their largest one-day dollar loss in almost three years to settle at a two-week low.
News that the U.S. and China agreed to work toward a fresh round of trade talks next month provided a boost to U.S. and global stock markets, and a stronger-than-expected private-sector employment data also helped to ease worries about a slowdown in the economy, damaging the metal’s haven appeal.
Gold for December delivery on Comex fell $34.90, or 2.2%, to settle at a two-week nadir of $1,525.50 an ounce, giving up the roughly 2% gain it scored over the past two trading sessions. Prices marked their biggest single-session percentage decline since June 15, 2018, and largest daily dollar loss since Nov. 11, 2016, according to Dow Jones Market Data.
December silver fell 74 cents, or 3.8%, to $18.807 an ounce, after settling Wednesday at its highest since September 2016. The most-active contract saw its largest one-day dollar and percentage decline in more than a year.
U.S. and Chinese negotiators will meet in early October, the Chinese Commerce Ministry said. The talks are aimed at ending a long-running trade war that has heightened worries about the global economic outlook and stoked recession fears.
Those concerns and a number of other geopolitical worries, including the prospect of a messy U.K. exit from the European Union, have been credited with lifting gold, a traditional haven that tends to appreciate during periods of rising uncertainty. Gold is up around 20% in the year to date and earlier this week hit the latest in a string of more-than-six-year highs.
Rising trade optimism fed a rally in U.S. stocks, drawing investor interest away from gold as the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% moved sharply higher in Thursday dealings. European and Asian benchmark stock indexes finished mostly higher.
“Resumption of U.S.-China trade talks, to me, is just an excuse to book profit in gold and silver long positions,” Chintan Karnani, chief market analyst at Insignia Consultants, told MarketWatch.
“U.S. August private ADP numbers coming in over 190,000 is the key cause for gold and silver to fall,” he said. The “U.S. economy is not as bad as traders have factored in…The pace of interest rate cuts could be slower.”
The nation’s businesses created 195,000 private-sector jobs in August, payroll processor ADP said Thursday. Economists polled by Econoday had forecast a gain of 150,000. Separately, U.S. government data showed the number of people who applied for unemployment benefits in the week at the end of August rose slightly, but there was no sign of rising or widespread layoffs.
”We’ve been here before and will unlikely see safe havens sold hard until we get meaningful de-escalation from both the Chinese and American tariffs,” said Edward Moya, senior market analyst at Oanda, in a note. “Gold is also approaching an overbought level that is similar to the oversold moment we saw in 2013, which signaled another major move which eventually identified a key trading range.”
In other metals trade, December palladium edged up by 0.6% to $1,561.10 an ounce, while October platinum fell 2.1% to $963.70 an ounce.
December copper added 1.8% at $2.642 a pound.
Among exchange-traded funds, SPDR Gold Shares /zigman2/quotes/200593176/composite GLD +0.74% lost 2.4%, sending the ETF lower week to date.