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Gold Stabilizes Following Big Drop in Previous Session

Published 09/06/2019, 08:13 PM
Updated 09/06/2019, 08:22 PM
© Reuters.
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Investing.com - Gold prices stabilized at lower levels early Friday in New York, after suffering their biggest one-day drop of the year on Thursday in the wake of surprisingly strong U.S. economic data and hopes for a de-escalation of the U.S.-China trade war.

At 8 AM ET (1200 GMT), gold futures for December delivery on the Comex exchange were at $1,513.70 a troy ounce, down 0.8% from late Thursday but up from an intraday low of $1,511.25 posted in the European morning.

Spot gold was at $1,506.06, down 0.9%.

The sharp pullback came after gold hit a six-year high earlier in the week, the result of rising risk-aversion among portfolio investors against a backdrop of slowing global growth and lower nominal returns on government bonds around the world. Around $17 trillion of bonds worldwide are now trading at negative yields.

It also came amid the first signs that central banks, whose buying drove the early stages of this year’s rally, had reduced their purchases more recently.

Some, at least, expect that to be a temporary aberration.

“If emerging markets cannot rely on the dollar as a guard against exchange rate instability, then we have to build our own defences,” Duvvuri Subarrao, a former governor of the Reserve Bank of India, wrote in a blog published Friday by the World Gold Council. “Holding gold within our reserves is an integral part of that self-defense.”

Elsewhere, silver futures were pulling back more dramatically, falling 2.8% to $18.28 an ounce. Platinum was down 3.2% at $932.90 an ounce.

Copper futures were down 0.4% at $2.63 a pound.

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