Gold futures on Wednesday retreated from a nearly six-year high scored a day earlier amid expected progress on U.S.-China trade talks and a less-dovish-than-hoped Federal Reserve.
U.S. Treasury Secretary Steven Mnuchin told CNBC, “we were about 90% of the way there [with a trade deal] and I think there’s a path to complete this.” He said he’s confident President Donald Trump and China’s President Xi Jinping will make inroads into those stalled talks at the weekend Group of 20 meeting, providing some buoyancy to assets perceived as risky like U.S. stocks YMU19, +0.29% DJIA, -0.67% and weakening appetite for havens like gold.
August gold GCQ19, -0.46% traded at $1,407.70 an ounce, down more than $10, or nearly 0.8%. The metal settled at $1,418.70 Tuesday, the highest finish for a most-active contract since Aug. 28, 2013, according to FactSet data. On Tuesday, the contract touched its highest intraday climb since May 2013 at $1,442.90 before pulling back.
Read: Why gold prices have climbed to their highest since 2013
Gold started its retreat after Federal Reserve Chairman Jerome Powell on Tuesday afternoon raised some doubt over the likelihood of the central bank delivering on market expectations for aggressive rate cuts.
Powell said uncertainty about international trade and worries about global economic growth might be starting to show through to economic data, though Fed officials don’t know how long that may last or how severe the drag might be.
Expectations for lower interest rates among global central banks and geopolitical concerns had been making gold a preferred investment these days, especially as competing low-risk Treasury bond yields dropped. The yield on the 10-year note TMUBMUSD10Y, +1.08% fell below 2% in recent sessions.
Haven instruments had also gained amid rising tensions between the U.S. and Iran, the immediacy of which had at least temporarily cooled.
“With such a strong run higher in the past couple of weeks (which added almost $120), profit taking is always a risk,” said Richard Perry, analyst at Hantec Markets.
He pointed to a couple of technical developments, including daily chart activity. “Breaking a run of higher daily lows is a warning for the bulls,” he said.
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July silver SIN19, -0.20% fell 4 cents, or 0.3%, to $15.26 an ounce. July platinum PLN19, -0.35% lost 0.3% to $807.60 an ounce, while September palladium PAU19, -0.10% fell 0.5% to $1,525.10 an ounce. July copper HGN19, -0.62% bucked the group’s general weakness, up about 0.1% to $2.7385 a pound.