Gold eases as dollar firms, copper firms as trade talks move into focus
Gold prices eased on Monday as the dollar firmed after a report said China was reluctant to agree to a broad trade deal with Washington, but bullion held a tight range as investors took a wait-and-see approach ahead of U.S.-China talks this week.
Spot gold was down 0.3 % at $1,499.79 per ounce at 1129 GMT. Prices firmed 0.5% last week on concerns of slowing global growth. U.S. gold futures slipped 0.5% to $1,505.30 per ounce. The United States and China are set to meet for trade negotiations in Washington on Oct. 10-11, although latest news reports suggest Beijing may be looking to restrict the scope of any deal.
"Gold seems to have run out of steam here, we just need a trigger for the market to move. The fact that the dollar is a tad higher is the reason gold is a bit softer," said Saxo Bank commodity strategist Ole Hansen. "Gold is holding on to what it knows best and right now it knows the $1,500 level quite well. It's going to be a little bit of a wait-and-see week, with the U.S. Federal Reserve minutes and the trade talks due this week."
The Fed Open Market Committee's minutes from its September meeting are due on Wednesday.
The dollar edged up against rivals after four straight days of losses last week, with China's offshore yuan and the euro both pressured. A higher U.S. currency makes dollardenominated gold more expensive for holders of other currencies, which could subdue demand. However, limiting gold's downside, European shares dipped as a fall in German industrial orders underscored concerns about a looming recession in Europe's largest economy.
Meanwhile, data out of the United States showed jobs growth slowed in September and wage growth stalled, even as unemployment dropped to a 50-year low.
But that did little to change market expectations that the Federal Reserve will likely cut interest rates at its next policy review on Oct. 29-30 to support the economy.
Meanwhile, copper edged higher on Monday ahead of a fresh U.S-China trade talks this week but reports that China was reluctant to agree to a wide-ranging deal tempered hopes for a speedy resolution.
Benchmark copper on the London Metal Exchange (LME) gained 0.4% to $5,668 a tonne in official trading rings.
The metal used in power and construction logged its third straight week of declines last week after soft economic data sparked fears that the trade war would hit global economic growth. Bloomberg reported at the weekend that Chinese officials are signalling increasing reluctance to agree to a broad trade deal pursued by U.S. President Donald Trump.
Officials from the world's two largest economies will meet in Washington over Oct. 10-11.
"It's hard to be optimistic that a deal could be reached given the pronouncements over the weekend," said Capital Economics senior commodities economist Caroline Bain.
"We have been here before, where ahead of the talks there is always a lot of optimism but nothing materialises."
TRADE NEGOTIATIONS: Trump said his administration had a "very good chance" of agreeing a trade deal and White House economic adviser Larry Kudlow said the U.S. team was "open-minded" about the outcome of this week's talks. .
COPPER INVENTORIES: On-warrant inventories of copper in LME-registered warehouses slipped 675 tonnes to 194,200 tonnes, having grown by 33,000 tonnes last week. MCUSTX-TOTAL
COPPER SPREAD: LME copper remained in a deep contango, indicating plentiful supply. The discount of LME cash copper to the three-month contract CMCU0-3 was at $35 a tonne, the biggest discount since August 2018.
POSITIONING: Hedge funds and money managers raised their net short positions in COMEX copper by 10,086 contracts to 62,741 in the week to Oct. 1, the U.S. Commodity Futures Trading Commission (CFTC) said.