Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinEnding a four-day winning streak, gold dipped 0.2% to close below $1,416 after news about China trade and a revised rate view from the Fed lifted the dollar, dulling demand for alternative stores of value.

Treasury Secretary Steven Mnuchin said today that a trade agreement with China is "about 90% of the way there." He's hopeful that President Trump and his Chinese counterpart Xi Jinping may finish the deal when they meet in Japan at the G-20 meeting this week.

US equities bounced slightly higher on the prospect of ending the trade war, with the Dow and S&P 500 adding around 0.1% while the tech-heavy Nasdaq jumped 0.4%. Tech shares have been especially affected by the conflict because intellectual property and piracy have been sticking points in negotiations.

The dollar also edged higher, adding 0.1% against major rivals, as traders reassessed the outlook for interest rates. St. Louis Fed President James Bullard said yesterday that the economic outlook is not dire enough for a half-point rate cut in July. Separately, Fed Chief Jerome Powell resisted calls from President Trump to cut rates, emphasizing the central bank's independence from politics.

Gold retreated from yesterday's close near a 6-year high above $1,418 on the slight shift in Fed outlook. While CME FedWatch still puts the odds of a quarter-point rate cut in July at 100%, the chances of a half-point reduction are down to 24% from 30% yesterday, based on Fed-fund futures trading. The deeper reduction would create more pressure on the dollar, lifting gold more in turn by making it less expensive overseas.

The other precious metals were mixed, with silver dipping less than a cent while platinum added 0.8% and palladium slid 0.4%.

At the Comex close: August gold dropped $3.30 to $1,415.40; July silver inched down a half-cent to $15.29; July platinum picked up $6.80 to 816.60; and September palladium slipped $6.80 to $1,525.70 an ounce.