Gold settled higher Thursday, for its fourth advance in the past five sessions, buttressed by anxiety ahead of a meeting between President Donald Trump and his Chinese counterpart Xi Jinping, and concerns that tax reform efforts could prove to be more difficult than once thought.
Gold settled up $4.80, or 0.4%, at $1,248.50 an ounce ahead of Trump’s meeting with Xi, while the dollar DXY, +0.18% strengthened and Treasury yieldsTMUBMUSD10Y, +0.19% remained higher following the release of the latest tally of first-time jobless benefits claims. The employment report showed a sharp drop of 25,000 in the latest week. The report helped to boost largely upbeat expectations for Friday’s closely watched monthly employment report.
Gold dipped initially but recovered late Wednesday afternoon after the release of the minutes from the Federal Reserve’s meeting in March. The minutes indicated that the Fed is likely to start shrinking its balance sheet this year in line with its tighter monetary-policy regime. Higher rates tend to strengthen the dollar which in turn makes assets priced in the U.S. currency more expensive, including gold.
Comments from U.S. House of Representatives Speaker Paul Ryan late Wednesday that tax reform efforts could even be more difficult than health-care reform boosted gold as it decimated stocks, said Ira Epstein, managing director at Linn Group, in an interview. Plus, the lack of a specific timeline for the Fed getting back to a normal balance sheet also boosted gold, Epstein said.