Progress in the US-China trade talks with Donald Trump and Xi Jinping agreeing to resume talks sparked gold prices to fall the most in a year as investors switched to shares.
Gold fell by 2% to $1,382 per ounce, the biggest fall since June 2018. Those watching the market said the optimism around a potential trade deal between the US and China led to the movement.
The US broad S&P 500 index of stock hit a new record surpassing June’s previous high, the S&P rose 1% to 2,971.41 when the Dow Jones opened up at 0.8%. The German Dax index and the UK FTSE were both up by 1.3%.
Russ Mould, investment director at stockbroker AJ Bell said, “Gold tends to do well during times of concern over growth, market volatility or when markets think the powers-that-be are losing control of events.
“A trade deal would deal with all three issues and markets are happy to take the view that a deal is coming. Though it could still be a long time coming, if there is to be one at all.”
The past months negotiations between China and the US has dominated market moves as positive statements are normally followed by extra tariffs, sending currency and stock along with the commodity markets up and down.