Gold prices drop as stock markets recover

Gold prices fell on Thursday in Asia as global stock markets recovered on a stronger-than-expected Chinese yuan daily fixing level.

Gold futures for December delivery, traded on the Comex division of the New York Mercantile Exchange, fell 0.5% at $1,512.50.

Global stocks gained today after the People’s Bank of China set the yuan’s daily reference rate at 7.0039 per dollar on Thursday. The Chinese currency breached the key 7 level this week, but its fixing previously hadn’t. While Thursday’s daily fixing was at the weaker level since 2008, it was stronger than markets expected, according to forecasts compiled by Bloomberg and Reuters.

Despite today’s losses, the yellow metal received support this week amid escalating trade war between the U.S. and China. U.S. President Donald Trump threatened to impose from Sept. 1 a 10% tariff on hitherto untaxed Chinese imports of $300 billion last week.

The PBOC, China’s central bank, then reportedly devalued the yuan in retaliation against Trump’s newly-planned tariff, sending an already bullish gold market into overdrive, as investors turned to safe-haven assets as hedges against economic and political uncertainties.