Gold fell for a fourth straight session on Monday, hitting a two-week low as investors' appetite for riskier assets increased on renewed optimism that a resolution to the protracted U.S.-China trade conflict will soon be reached.
"There is some renewed risk-on (sentiment) in the market based on the news from the trade deal front ... we have seen the bonds trade a tad weaker, yen trading softer as well and gold drifting lower," said Saxo Bank commodity strategist Ole Hansen. Hansen added that the stock market "is trading on the assumption that a trade deal of some sort will be reached." World shares staged a cautious rally, while the safe-haven Japanese yen fell to a one-week low against the U.S. dollar.
Beijing and Washington were "very close" to an initial trade agreement, Chinese newspaper Global Times reported, citing experts close to the talks. Adding to the positive mood was the weekend announcement that China would seek to improve protections for intellectual property rights, a sticking point in the talks. Intellectual property rights protection "is a key element the U.S. wants China to reform in order to reach a trade deal.
It could be that the U.S.'s hard-line approach on the trade deal with China is putting pressure on China to get a deal completed soon," Kitco Metals senior analyst Jim Wyckoff said in a note. Still, investors remained cautious, with officials, lawmakers and trade experts from both sides saying an ambitious "phase two" trade deal looked less likely.
"There is no major selling in the gold market, which might suggest that people are still sceptical about these developments," Julius Baer analyst Carsten Menke said. "They see them as some sort of temporary relief, not a real longer-term solution."
Speculators increased their bullish positions in COMEX gold and silver in the week to Nov. 19, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Silver fell 0.6% to $16.90 per ounce, after touching its lowest price in a week. Palladium rose 1.3% to $1,799.04 per ounce, having earlier hit its highest level since Nov. 7. Platinum was up 0.6% at $896.75 per ounce.