Gold prices retreat from 2-week high, but head for weekly gain

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Published: August 2, 2019 8:01:07 AM

Spot gold was down 0.9% at $1,432.15 per ounce as of 0139 GMT, after hitting a two-week high of $1,446.10 earlier in the session.

 U.S. gold futures rose 1% to ,445.90 an ounce.
U.S. gold futures rose 1% to ,445.90 an ounce.

Gold prices fell on Friday, consolidating from a more than 2% surge in the previous session after U.S. President Donald Trump broke a trade truce with China, but the metal was headed for a third weekly gain in four.

FUNDAMENTALS
* Spot gold was down 0.9% at $1,432.15 per ounce as of 0139 GMT, after hitting a two-week high of $1,446.10 earlier in the session.
* The metal has risen about 1% so far this week.
* U.S. gold futures rose 1% to $1,445.90 an ounce.
* Trump said he would impose an additional 10% tariff on $300 billion worth of Chinese imports on Sept. 1 after U.S. negotiators returned from trade talks in Shanghai, saying China had failed to buy large quantities of U.S. agricultural products as promised.
* Trump also said if trade negotiations fail to progress he could raise tariffs further – even beyond the 25% levy he has already imposed on $250 billion of imports from China.
* The tariffs may also force the Federal Reserve to again cut interest rates to protect the U.S. economy from trade-policy risks, experts said.
* The October Fed funds rate futures have jumped to now fully price in a rate cut in September, compared with only around 60% before the tariff announcement. Another 25 basis point move is priced in by December.
* Trump’s surprise announcement sent shockwaves through global financial markets and wiped out the dollar’s recent rally against the yen, made after U.S. Federal Reserve Chairman Jerome Powell indicated the central bank was not entering a prolonged easing cycle.
* The dollar index was steady on Friday after posting its biggest daily decline in two weeks in the previous session.
* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.53% to 827.82 tonnes on Thursday from 823.42 tonnes on Wednesday.
* Global gold demand rose 8% in the first half of this year to the highest since 2016, driven by central bank buying and a flood of investment into gold-backed exchange traded funds (ETFs), the World Gold Council said on Thursday.

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