Gold Futures Settle Modestly Lower
Gold futures settled on a negative note on Wednesday, despite staging a smart rally from lower levels towards the later part of the session.
Rising tensions between the U.S. and China over Beijing’s security laws for Hong Kong triggered buying in the safe-haven asset and limited its losses.
Tensions between the U.S. and China have increased after U.S. Secretary of State Mike Pompeo said Hong Kong is no longer considered autonomous from China.
It is felt that the comments from Pompeo may lead to revocation of special treatment for the Hong Kong economy, which is currently exempt from tariffs levied on Chinese imports.
China’s foreign ministry spokesman has reportedly said that Hong Kong is china’s internal affair and that China would take necessary countermeasures against interference by external forces.
Gold futures for August ended down $1.40, or about 0.08%, at $1,726.80 an ounce, after being down sharply at $1,701.60 an ounce earlier in the session.
Silver futures for July ended up $0.162, or 0.9%, at $17.757 an ounce, while Copper futures for July declined 1.7% to $2.3800 per pound.
Gold prices declined sharply earlier in the day as reopening of businesses and a drop in new coronavirus cases resulted in an significant improvement in risk sentiment.
Stimulus proposals by the Chinese government and the European Commission contributed to gold’s weakness.
The Japanese government is likely to inject a fresh stimulus package worth $1.1 trillion on top of a $1.1 trillion package already rolled out by the government last month.
The European Commission today announced a ?750 billion ($821 billion) aid package to help the EU recover from the coronavirus pandemic. The plan will have to be backed by all 27 nations in the bloc.
In a statement on its website, the EU governing body proposed the creation of a new recovery instrument, dubbed Next Generation EU, to address the economic damage caused by the outbreak.
According to the statement, Next Generation EU will consist of ?750 billion as well as targeted reinforcements to the long-term EU budget for 2021-2027, and will bring the total financial firepower of the EU budget to ?1.85 trillion. The recovery fund would be embedded within the next long-term EU budget, it added.
France and Germany last week proposed to set-up for a 500 billion-euro ($547 billion) fund to aid recovery efforts.