Bullion hit a six-year high last week as top central banks including the U.S. Federal Reserve adopted a more dovish tone and tensions spiked between the U.S. and Iran.
Gold tumbled back below $1,400 an ounce after the U.S. and China reached a truce in their trade war, dealing a blow to havens.
Prices fell the most in a year after Presidents Donald Trump and Xi Jinping agreed to resume negotiations in a bid to resolve differences between the world’s two biggest economies. Still, the setback may be temporary as investors now train their focus on U.S. jobs data due Friday for clues on the Federal Reserve’s next move on policy.
“Gold was well overdue a period of consolidation and gold bulls should welcome it,” said Ross Norman, chief executive officer of gold brokerage Sharps Pixley Ltd. “This provides a welcome entry point.”
Bullion hit a six-year high last week as top central banks including the U.S. Federal Reserve adopted a more dovish tone and tensions spiked between the U.S. and Iran. Driven by speculation that U.S. interest rates may soon be headed lower, investors plowed into bullion-backed exchange-traded funds, which swelled 5% in June, the most since 2016.
Gold futures dropped 1.7% on the Comex in New York, the biggest decline in over a year, to settle at $1,389.30 at 1:32 p.m. Prices rallied 7.8% last month. A gauge of the U.S. dollar rose 0.5% on Monday after sagging 1.6% in June.
Gold’s pull-back was a natural reaction to the dollar-friendly news, said David Govett, head of precious metals trading at Marex Spectron Group in London. “I don’t think we collapse from here, but I do think we have seen the highs now.”