By Geoffrey Smith
Investing.com -- Gold prices edged lower on Tuesday as risk assets held their nerve despite bearish news from both the U.S. domestic front and China.
By 11:30 AM ET (1530 GMT), gold futures for delivery on the Comex exchange were down 0.4%, at $1,742.55 an ounce, while spot gold was down 0.3% at $1,734.01.
Silver futures underperformed, losing 2.4% to $18.36 an ounce, while platinum futures fell 4.1% to $864.50 as some of the optimism about recovering industrial demand weakened in the face of widespread riots across the U.S. and reports that China was pressuring state buyers not to buy U.S. agricultural goods.
The former could slow the return of the U.S. economy to pre-pandemic levels of activity, while the latter would threaten the fragile truce on trade that the two sides agreed in January.
“The economic recovery in the U.S. – as elsewhere - has always depended on the absence of fear,” said Paul Donovan, chief economist with UBS Global Wealth Management, in a morning note. “Fear of unemployment, fear of the virus or any other fear which impacts the willingness of consumers to spend and businesses to function normally will slow or stop the economic bounce-back.”
“The current situation seems likely to increase fear across the political spectrum as long as the unrest continues,” he added.
On a light day for economic data, central bank news flow suggested, if anything, an easing of the rush to monetary stimulus that has been one of the cardinal factors behind gold’s rally this year.
The Reserve Bank of Australia left its key rate unchanged and sounded less than enthusiastic about cutting it further, while the European Central Bank’s first published breakdown of the bond purchases it has made under its Pandemic Emergency Purchase Program suggested that the pressure on peripheral eurozone sovereign bonds – particularly Italy’s – had not been as great as feared.
There was more bullish news for the euro out of Berlin, where the German Federal Government sat down to discuss a new stimulus package reportedly worth up to 100 billion euros ($111 billion). German government bond yields, the eurozone’s benchmark risk-free rate of return, rose to their highest in over a month.