Investing.com – Gold prices inched up on Monday in Asia but were still below the $1,500 mark after the U.S. and China reached a “phase one” trade deal late last week, which saw the U.S. paused tariffs slated to hit imports of Chinese goods this week.
U.S. President Donald Trump says the two nations had reached a “very substantial phase one deal.”
In exchange, China agreed to purchase between $40 billion and $50 billion in U.S. agricultural goods. Further steps will be reached in phases, the president said.
Prices of the yellow metal fell immediately following the report as investors embraced risk and dumped safe havens, but clawed back some gained today.
The contract 0.2% to $1,491.35 by 1:02 AM ET (04:02 GMT).
Citing a research report, Bloomberg said China’s shoppers and investors seemed to have lost their appetite for gold this year.
Jewelry consumption is forecast to drop 4% to about 660 tons in 2019, according to forecasts from Metals Focus Ltd., while a decline of more than 20% to around 240 tons is seen for investment demand.
“The economic conditions in the country are throwing a spanner in the works and that’s keeping jewelry consumption under pressure,”said Nikos Kavalis, a director at the London-based research firm.
Another factor hurting demand has been the weaker yuan, Kavalis noted.
“Back in 2017 and 2018, you had a boost in demand from more sophisticated type investors buying gold as a hedge against RMB depreciation,” said Kavalis. “Following the rise in the gold price that we’ve seen in the summer, it looks like there is less of that because now a lot of these investors are also worried that the gold price is looking rich.”
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