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Gold price drops sharply as trade talk hopes rise

In Summary

• The price of gold has seen its sharpest fall for a year as investors sold the precious metal amid signs of progress in US-China trade talks.

• Gold, often seen as a safe asset in times of uncertainty, fell 2% to $1,382 per ounce, the biggest drop since June 2018.

Gold Mining activities
Gold Mining activities

The price of gold has seen its sharpest fall for a year as investors sold the precious metal amid signs of progress in US-China trade talks.

Gold, often seen as a safe asset in times of uncertainty, fell 2% to $1,382 per ounce, the biggest drop since June 2018.

Market watchers say more optimism around a potential trade deal between the US and China led to the movement.

The news boosted riskier assets such as shares, sending stock markets higher.

In Europe, both the UK's FTSE 100 index and Germany's Dax index were up by 1.3%.

"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," said Russ Mould, investment director at stockbroker AJ Bell.

"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."

Negotiations between China and the US have dominated market moves for months as positive statements are often followed by extra tariffs, sending stock, currency and commodity markets up and down.

The latest moves follow a pledge to renew talks between the US and China, an agreement that was reached at the G20 summit in Japan.