Gold price sees retreat on the back of US-UK trade deal breakthrough

LONDON (May 8) Gold (XAU/USD) slips to $3,340 at the time of writing on Thursday, a smaller-than 1% correction in safe haven outflow, with United States (US) President Donald Trump expected to announce a trade deal agreement with the United Kingdom (UK) at a news conference at 14:00 GMT in Washington, according to people familiar with the matter. Meanwhile, the UK administration has confirmed to Bloomberg and the Financial Times that a deal will be announced. Details on that trade deal remain unconfirmed. 

Additional driver overnight was the Federal Reserve (Fed) interest rate decision and Fed Chairman Jerome Powell’s remarks. The main takeaway from Powell’s words was that the US economy is showing signs of resilience for now. However, Powell expects the actual impact of tariffs and heightened uncertainty to impact economic numbers later this year. The central bank kept interest rates unchanged in the range of 4.25%-4.50%, confirming the markets’ assumption, as seen in the Fedwatch Tool, that a rate cut is not foreseen until summer. 

Daily digest market movers: Comprehensive deal announced

• Halfway through the European trading session, President Trump tweeted on his Truth Social Network that the UK trade deal is "full and comprehensive". More details to be released at the press conference.
• In the Asian trading session, before the trade deal announcement was issued, the Gold price was climbing, after tumbling on Wednesday when the Federal Reserve held interest rates, and Chair Jerome Powell said the central bank isn’t in a rush to cut despite trade-war uncertainty, Bloomberg reports. 
• That the Gold Rush is not over, even with a possible initial trade deal, can be seen with statements from several hedge funds. This Thursday, Waratah Capital Advisors Ltd. reported it is betting on Gold to lift its returns this year as investors pile into the asset to shelter their wealth during the global trade war, Bloomberg reports. 
• “Big News Conference tomorrow morning at 10:00 EDT (14:00 GMT), The Oval Office, concerning a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY. THE FIRST OF MANY!!!” President Trump wrote on his social media platform “Truth Social”, The New York Times reports. 

FXStreet