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Gold price drops on trade deal, UK election

Kitco News

Spot gold dropped to a four-month low today of $1,462.90 oz ounce before recovering.

A "deal in priciple" with Beijing was announced this afternoon. The agreement's scope may be quite narrow.

Bloomberg is reporting that the U.S. agreed not to enact anymore tariffs in exchange for China buying more agricultural good. Reuters reports that the written text of the agreement is still being finalized.

In Britain the Conservative Party and Prime Minister Boris Johnson won a majority, securing the numbers needed for his party to enact their Brexit plan and leave the EU by the end of the January. The Conservatives are on track to have an 86-seat lead in Britain's commons. Labor dropped 71 seats.

The British pound shot up on the news and broke through the 1.20 threshold against the Euro, a level not see since 2016. The pound was also up against the U.S. dollar, trading at 1.35.

"As the pound leaps against the euro and the dollar, the message from investors is clear, and should be reinforced when cash trading begins tomorrow – a possible end to years of delay and uncertainty, as Boris Johnson wins a handsome victory and cements his reputation as the man that ‘got Brexit done,’" wrote Chris Beauchamp, a market analyst at IG, published by FX Street.

Beauchamp said with uncertainty ended investors should return to the U.K.

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