Investing.com - Gold prices extended losses in early morning trade on Wednesday as demand for haven assets ebbed after U.S. Treasury Secretary Steven Mnuchin talked up the progress of trade negotiations between Washington and Beijing.
Spot gold slid $20.27, or 1.42%, to $1,403.11 by 7:15 AM ET (11:15 GMT), pulling back from a six-year high of $1,438.99 reached on Tuesday.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $12.45, or 0.9%, to $1,406.25 a troy ounce.
Mnuchin told CNBC that “we were about 90% of the way there (on reaching a trade deal) and I think there’s a path to complete this”.
He also showed confidence that the meeting between U.S. President Donald Trump and Chinese counterpart Xi Jinping at the G20 summit on Saturday could achieve progress.
Mnuchin’s remarks came after reports that the U.S. is willing to delay the next round of tariffs on $300 billion in Chinese goods as trade negotiators prep further talks. Washington would make the temporary concession in order to bring Beijing back to the negotiating table, according to sources cited by Bloomberg.
The news added to downward pressure on gold from Federal Reserve Chairman Jerome Powell’s remarks a day earlier.
The Fed chief shrugged off recent calls from Trump to cut rates and emphasized that policymakers were evaluating whether tame inflation and fallout from the U.S.-China trade conflict warranted easing policy.
Further dampening the more ambitious expectations of policy easing, St. Louis Fed President James Bullard, the only member of the Fed's policy-making committee to vote for a quarter-point cut in June, said that a 50 basis point reduction would be going too far.
Michael Hewson, chief market analyst at CMC Markets, considered Powell’s remarks to be a “wakeup call” for U.S. markets, including gold.
“Financial markets have become too used to getting their own way when it comes to easy money, and Powell’s stance last night was entirely sensible in terms of keeping the central banks options open,” Hewson said in a note issued Wednesday.
In other metals trading, silver futures lost 0.4% to $15.242 a troy ounce by 7:18 AM ET (11:18 GMT).
Palladium futures traded down 0.4% at $1,526.20 an ounce, while sister metal platinum lost 0.5% to $810.85.
In base metals, copper dipped 0.1% to $2.733 a pound.