Gold remains firm near all-time highs while US makes progress in trade talks

LONDON (April 17) Gold price (XAU/USD) ticks lower to near $3,325 in Thursday’s early North American session after hitting a fresh all-time high of $3,358 earlier in the day. The precious metal faces slight profit-booking as meaningful progress in trade negotiations by the United States (US) with Japan and Mexico has offered some relief on fears of potential global economic turmoil. However, US-China trade tensions continue to protect the downside in the Gold price.

"Had a very productive call with the President of Mexico yesterday. Likewise, I met with the highest-level Japanese Trade Representatives. It was a very productive meeting. Every Nation, including China, wants to meet! Today, Italy! US President Donald Trump wrote in a post on Truth.Social platform in late European trading hours on Thursday. 

Positive development in trade talks by Washington with its trading partners indicates that US President Trump has used the tariff tool to have a dominant position while negotiating bilateral deals with his trading partners. This has resulted in a slight ease in global market uncertainty.

Meanwhile, the intensified trade war between the US and China is sufficient to keep the risk-appetite theme at bay. Precious metals tend to perform better in heightened global economic tensions.

The tussle between the US and China has become more of a battle of dignity than a scale of tariffs. The US wants China to initiate trade talks first, citing that they need our money. Meanwhile, China is willing to come to the table, but with respect and mutual interest. On Tuesday, White House press secretary Karoline Leavitt said that the President wants China to go first for trade talks. "The ball is in China’s court: China needs to make a deal with us, we don’t have to make a deal with them,” Leavitt said.

Daily digest market movers: Gold price ticks lower as US Dollar rebounds

• Investors cash in some longs in the Gold price after it reached an all-time high of $3,358 on Thursday. The slight correction in the precious metal's price is also driven by a nominal recovery in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, attracts bids near the three-year low of 99.00 and moves higher to near 99.60, at the time of writing.
• Trump’s preference for trade talks over imposition of hefty reciprocal tariffs has lightened uncertainty across the globe, which is clear from a slight recovery move in the US Dollar. Technically, a higher US Dollar makes investment in Gold expensive for investors.
• The USD Index faced a ruthless sell-off in the past few months as market experts became highly pessimist on the US economic growth in the face of Trump’s tariff policies. Market participants anticipated that the imposition of higher duties on all imports into the US would lead to an increase in inflation and impact economic growth.
• Additionally, a slight hawkish commentary from Federal Reserve (Fed) Chair Jerome Powell at the Economic Club in Chicago on Wednesday offered some relief to the US Dollar. Powell signaled that the US economy is still firm despite Trump’s economic policies have stemmed economic risks. “US economy is solid despite heightened uncertainty, downside risks,” Powell said. He was confident that the economy is still in a position to wait for greater clarity, which gives them confidence to avoid any monetary policy adjustments.

FXStreet