By Barani Krishnan
Investing.com - The curtain could be closing soon on one of the world's biggest trade dramas, with the outcome holding as much uncertainty as promise to gold traders and investors.
Gold prices initially hit four-week lows on Thursday after better-than-expected weekly U.S. jobless claims data led to fewer bids for the safe haven. But it recovered all of that later amid speculation that the United States and China were close to a trade deal that could end the tariffs war of the past year. The dispute had taken a great toll on their economies and upended the livelihood of many U.S. farmers and Chinese entrepreneurs.
Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled the official trading session down $1, or 0.1%, at $1,294.30 per ounce.
But spot gold, reflective of trades in bullion, was up $2.58, or 0.2% at $1,292.49 an ounce by 2:20 PM ET (18:20 GMT), after hitting a four-week low of 1,281.02 earlier.
Bullion's price rebounded on speculation that President Donald Trump will meet China's Vice Premier Liu He later in the day to discuss the progress of their trade negotiations and possibly fix a summit with President Xi Jinping to announce a trade agreement.
Gold's fate from a U.S.-China trade deal is far from clear.
For one thing, the dollar, and not gold, has been the most popular hedge to the U.S.-China trade war despite the safe-haven standing of the precious metal. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose by 0.3% on Thursday to 96.907.
Industry analysts like Josh Graves at RJO Futures in Chicago say a China trade deal may be good for gold as the potential of an economic rebound for Beijing could raise jewelry consumption and related bullion demand.
But others believe there are too many unknowns from such a deal to quickly conclude a win for gold.
"The China-U.S. talks apparently have some sticky points that are still undecided, all pointing to uncertainty," said George Gero, precious metals analyst at RBC Wealth Management in New York.
Bloomberg reported Thursday the U.S. wanted to set a 2025 target for China to meet trade pledges. The plan would see China committing to buy more U.S. commodities, including soybeans and energy products, and allow full foreign ownership for U.S. companies operating in China as a binding pledge.
That comes after a Financial Times report on Wednesday that U.S. and Chinese officials have resolved most of the outstanding issues between the two sides, but were still haggling over how to implement and enforce an agreement.
Palladium fell for a second-straight day, though it stayed above gold to remain the world's priciest metal.
Spot palladium was down $40.50, or 2.9%, at $1,368.30 an ounce. The silvery-white auto-catalyst metal, used for purifying gasoline emissions, traded some $300 above gold early last month. The premium has been cut now to less than $100 lately.
Trades in other Comex metals as of 2:20 PM ET (18:20 GMT):
Palladium futures down $42.15, or 3.1%, at $1,335.95 per ounce.
Platinum futures up $28.55, or 3.3%, at $902.75 per ounce.
Silver futures up 1 cent, or 0.1%, at $15.11 per ounce.
Copper futures down 3 cents, or 1%, at $2.92 per pound.