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Gold Steadies Amid Stalled US-China Trade Talks, Higher Treasury Yields

May 18, 2018 at 15:51 by Andrew Moran

Gold futures are steadying at the end of the trading week, but the precious metal is poised for its second straight weekly loss after a month of consecutive gains. Gold prices have dipped below the important $1,300 threshold on rising Treasury note yields, a strengthening currency, and a lack of stimulating reports coming out of trade talks between Chinese and US officials.

June gold futures rose $1.30, or 0.10%, to $1,290.70 per ounce at 15:34 GMT on Friday. The yellow metal is on track for a weekly decline of about 2%, marking its second consecutive weekly drop.

Silver, the sister commodity to gold, is slumping to close the trading week. July silver futures slipped $0.036, or 0.22%, to $16.44 an ounce. The white metal is also poised for a weekly fall of roughly 1.5%.

Precious metals are taking a hit on a rallying US dollar and booming Treasury note yields. The greenback surged 0.23%, lifting it to a weekly increase of more than 1%. The 10-year Treasury note is hovering around a seven-year high of 3.1%, while the 30-year Treasury note yield has risen above the three-year high of 3.2%. A rising buck is bad for commodities that are priced in dollars because it makes it more expensive for foreign investors to purchase, while higher yields hurt demand for non-yielding bullion.

Contrary to media reports, China’s Foreign Ministry confirmed that it has not proposed to slash its trade surplus with the US by $200 billion. The two sides are engaged in fierce trade negotiations as Beijing’s trade deficit with Washington is just under $400 billion.

Ministry spokesman Lu Kang told the press:

This rumor is not true. This I can confirm to you. As I understand, the relevant consultations are on-going and they are constructive.

Other metal commodities are in a sea of red. July copper futures slid $0.011, or 0.39%, to $3.077 per pound. July platinum futures fell $6.60, or 0.74%, to $885.50 per ounce. July palladium futures cratered $19.50, or 1.99%, to $958.20 an ounce.

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