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Gold Falls on Higher Dollar, Capped by ‘Substantial Progress’ in Trade Talks

February 25, 2019 at 16:56 by Andrew Moran

Gold futures are trading slightly lower to kick off the trading week on a stronger US dollar, but the losses were capped by reports of “substantial progress” in US-China trade negotiations. Investors have also been paying attention to news that two of the biggest mining companies might be merging to form a $42 billion business.

April gold futures tumbled $2.40, or 0.18%, to $1,330.40 per ounce at 15:19 GMT on Monday. Last week, gold prices posted a healthy 0.8% gain as they are now up 3.25% year-to-date.

Silver, the sister commodity to gold, is in the red to start another week of trading. May silver futures slipped $0.05, or 0.29%, to $15.96 an ounce. The white metal also recorded a weekly advance of 0.8%, bringing its YTD advance to 2.3%.

A modest gain in the dollar is driving the metals market on Monday as the greenback rose 0.02% to 96.45. Last week, the currency reported a 0.5% drop, lowering its gains so far in 2018 to 0.3%. A stronger buck is bad for dollar-pegged commodities because it makes it more expensive for foreign investors to purchase.

Precious metals are capping any losses on President Donald Trump’s doubling down remarks on Sunday that he would be willing to extend the March 1 trade truce deadline. The president cited “substantial progress” in US-China trade discussions as both sides are aiming to resolve some key trade differences between the world’s two largest economies.

He tweeted:

I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very……

….productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!

According to many reports, there are several points of contention, including intellectual property, trade balances, and agriculture.

Markets were rocked on Monday on news that Barrick Gold is proposing an all-share merger with Newmont Mining Corp that would be worth $42 billion. Newmont, which recently acquired Goldcorp, has resisted the offer from Barrick, reports suggest.

Investors will now look ahead to Federal Reserve Jerome Powell who will deliver testimony on Capitol Hill Tuesday and Wednesday.

On the data front, US wholesale inventories edged up 1.1% in December, Census Bureau data show. The ratio of inventories to sales increased from 1.30 to 1.33, the highest level since the middle of 2016.

In other metal markets, May copper futures dipped $0.005, or 0.2%, to $2.94 per pound. May platinum futures advanced $11.20, or 1.32%, to $857.10 an ounce. May palladium futures surged $33.50, or 2.29%, to $1,495.70 per ounce.

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