Gold prices hit 2-week low on reopening optimism

Gold prices hit 2-week low on reopening optimism

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Gold eased to a two-week low on Wednesday on optimism about the reopening of the world economy, though rising Sino-US tensions over Beijing’s proposed security law for Hong Kong capped losses.

Spot gold was down 0.2 per cent to $1,707.85 per ounce by 0742 GMT, after hitting its lowest level since May 13 at $1,703 earlier in the session. US gold futures were down 0.5 per cent to $1,697.60.

“What we saw over the preceding 24 hours was a break of relatively meaningful support at about $1,715,” said DailyFx currency strategist Ilya Spivak.

“The positive story seems to be easing of restrictions and (that) there will be some sort of rebound in economic activity… but, there is (also) a lot of negativity. Tension between the US and China is a huge risk.”

US President Donald Trump said on Tuesday Washington was working on a strong response to China’s planned national security law for Hong Kong, adding it would be announced before the end of the week.

Asian shares slipped as political unrest in Hong Kong rekindled concerns about the disruptive protests seen last year.

US consumer confidence nudged up in May and new home sales beat expectations, data showed on Tuesday.

Risks for a temporary short-term gold market unwind to a low- to mid-$1,600 level seem to be rising, Citi said in a note, adding that they “remain outright bullish (on) gold over the medium term and forecast that $2,000/oz will be breached in the next 12 (months)”.

Economic prospects for the developed world this year have darkened again in the past month, with a V-shaped sharp recovery seen as unlikely, a poll by Reuters showed.

“The long-term consequences of this lockdown are not going away anytime soon and we aren’t going to have the perfect economy,” Spivak said.

Palladium rose 0.6 per cent to $1,967.72 per ounce, platinum gained 0.2 per cent to $831.16. Silver fell 0.4 per cent to $17.04.

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