(Bloomberg) -- Gold posted its biggest weekly gain since August as investors questioned how far a partial U.S.-China trade deal goes toward resolving frictions that have shaken markets over the past year.
Palladium retreated from a record and copper slid from a seven-month high as stocks swung between gains and losses. While China said it agreed to a phase-one trade pact and that the U.S. will roll back tariffs in stages, markets gyrated as investors awaited more details on the accord. Bullion futures rose as much as 0.7% as the qualms helped support demand for the metal as a haven.
“There’s a little bit of an unknown here, which should be supportive of gold until we see something more concrete with the next part of the deal, and that’s pressuring copper as well,” Bob Haberkorn, senior market strategist at RJ O’Brien & Associates LLC, said by phone.
“It appears phase one is done, but it doesn’t appear that it’s going to meet expectations that the market had for the first phase of the deal,” he said. “The question is going to be how many phases and how long.”
Gold futures for February delivery rose 0.6% to settle at $1,481.20 an ounce at 1:30 p.m. on the Comex in New York, after falling as much as 0.5%. The metal is up 1.1% this week, the most since Aug. 9.
More trade between the two largest economies would be good news for base metals, many of which have been stuck in a rut for more than a year as trade tensions and weaker global manufacturing weighed on demand prospects.
Spot palladium slid 0.5% after reaching an all-time high $1,982.01 an ounce earlier. Futures slipped from their record to fall back below $1,900. The metal had been on its way an unprecedented 16th straight gain after signs of a breakthrough in the U.S.-China trade talks, fueling hopes for a rebound in the auto industry, palladium’s biggest consumer.
“The market is very much responding to news flow,” Bart Melek, head of commodity strategy at TD Securities, said by phone from Toronto. “We should have a grain of salt handy when we digest this news.”
Comex copper for March delivery fell 0.6% to $2.781 a pound, after rising as much as 1.2% on the heels of the announcement from China.
The metal -- often considered a barometer of global growth -- has advanced this month amid speculation around a trade deal, and on some tentatively better signals for the world economy.
Copper’s “anemic” supply growth will boost prices as demand recovers next year, Morgan Stanley said earlier this week. The commodity, along with nickel and palladium, is among the best-placed to benefit from a phase-one deal, Citigroup Inc. said in emailed comments late Thursday.
--With assistance from Martin Ritchie and Thomas Biesheuvel.
To contact the reporters on this story: Justina Vasquez in New York at jvasquez57@bloomberg.net;Yvonne Yue Li in New York at yli1490@bloomberg.net
To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Joe Richter, Patrick McKiernan
©2019 Bloomberg L.P.
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