Fundamental Comment

Gold slides below $1390 on trade deal hopes

Gold slides on trade deal hopes

Gold prices dropped on Monday after opening on a downside gap as optimism regarding a potential trade agreement between the U.S. and China dented the appeal of the yellow metal as a safe haven asset.

The precious metal slipped to a low of $1381.74 an ounce, the lowest since June 20, while currently hovering around $1391.00 an ounce.

Gold opened on a downside gap at $1391.52, compared to Friday’s close at $1409.45, where the fall below $1400 triggered further losses.

After Presidents Donald Trump and Xi Jinping meeting at the Group of 20 Summit, the United States and China agreed on Saturday to resume trade talks after Trump made concessions including not imposing new tariffs on Chinese imports and easing restrictions on Huawei's technology company.

According to Trump, the Chinese side has agreed to make new unspecified purchases of US agricultural products and return to the negotiating table.

“We’re right back on track,” Trump said, referring to the agreement that have been made during an 80-minute meeting. “We’re holding back on tariffs and they’re going to buy farm products,” alongside with his tweet that, the meeting went “far better than expected,” he added.

“China is sincere about continuing negotiations with the United States ... but negotiations should be equal and show mutual respect,” according to Chinese foreign ministry.

After locking a weekly gain, the U.S. dollar climbed to a high of 96.21, resuming its advance for a fifth straight session, according to the dollar index.

U.S. stocks opened higher to set a new record high on Monday, with technology stocks are among the top rises.

The Dow Jones Industrial Average surged 0.86 percent to 26,828.40, S&P 500 index climbed 1 percent to 2,970.78 and the Nasdaq Composite augmented 1.38 percent to 8,116.37, as of 14:15 GMT.

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