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Gold Falls to Three-Month Low on Trade Optimism, Rising Yields

November 8, 2019 at 14:01 by Andrew Moran

Gold futures are trading at their lowest levels in three months and are poised for one of their worst weeks this year. The yellow metal is falling on growing optimism over a US-China trade deal and rising government yields that threaten bullion’s luster. A rising dollar also hurt gold’s appeal to finish the trading week.

December gold futures tumbled $4.30, or 0.29%, to $1,462.10 per ounce at 12:56 GMT on Friday on the Comex division of the New York Mercantile Exchange. The yellow metal is on track for a weekly loss of 3.5%, lowering its year-to-date gain to under 14%.

Silver, the sister commodity to gold, is also sliding to end the trading week. December silver futures plummeted $0.165, or 0.97%, to $16.845 an ounce. The white metal is poised for a steep weekly decline of 7%. So far this year, silver prices are still up 8.3%.

It appears that Washington and Beijing are set to sign phase one of a new trade agreement. The Chinese Ministry of Commerce told the press that both sides have agreed to incrementally remove the tit-for-tat tariffs, much in the same way they were gradually implemented and increased. However, new reports on Friday suggest that some trade advisors in the White House are against such a move until a full deal is in place.

That said, high-level administration officials have been quite optimistic in the media. Commerce Secretary Wilbur Ross stated that a deal is imminent and that the government will soon issue Huawei licenses to hundreds of US firms in the coming months.

The main hurdle seems to be where and when to sign the trade pact. It was supposed to be signed next week in Chile during the Asia-Pacific Economic Cooperation (APEC) summit, but the nationwide protesters forced officials to cancel the event. Reports suggest that principal-level officials are considering London is the destination for the historic signing next month.

A jump in yields is also prompting traders to shun precious metals. In recent sessions, there has been a surge in yields for government notes, sending investors away from non-yielding bullion. The 10-year Treasury note yield, for instance, offers a 1.94% return, up from 1.727% a week ago.

A strengthening greenback is not helping dollar-denominated metal commodities. The US Dollar Index, which measures a basket of currencies, advanced 0.15% to 98.29, from an opening of 98.14. A rising buck hurts precious metals because it makes it more expensive for foreign investors to purchase.

In other metal markets, December copper futures dropped $0.0365, or 1.34%, to $2.69 per pound. December platinum futures plunged $21.00, or 2.3%, to $893.00 an ounce. December palladium futures cratered $34.80, or 1.96%, to $1,743.00 per ounce.

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