BBC.- 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.
US President Donald Trump agreed to hold off on $300bn of new tariffs on goods and relaxed restrictions on Huawei, while China agreed to make new purchases of US farm equipment.
Last year, the US imposed three rounds of tariffs on more than $250bn worth of Chinese goods. China hit back by imposing tariffs ranging from 5% to 25% on $110bn of US products.
A truce agreed last December collapsed and in May the US raised tariffs on $200bn of Chinese products to 25% from 10%. Again China retaliated with tariff on $60bn of US goods.
The price of gold is also retreating after gaining 8% in June, with prices exceeding $1,400 per troy ounce.
«Gold has just had a strong run. Nothing goes up in a straight line,» said Mr Mould.
While it earns no income, like a share or a bond would, gold’s indestructible nature and its place in history as a store of value make it attractive to some investors in times of strife.
Other safe-haven assets also declined, including the Japanese yen and the Swiss franc. The dollar rose 0.4% against the yen to 108.26, and advanced 0.7% on the franc to 0.9830 francs.
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