Gold Prices Slip Below $1,500 on Trade Talks Optimism
Gold prices fell below the $1,500 level on Tuesday in Asia. Thus, U.S. President, Donald Trump, said the signing of a partial deal might be “ahead of schedule.”
U.S. Gold Futures for December delivery slipped 0.1% to $1,494.35 per ounce.
Also, U.S. stocks closed higher overnight. However, Asian shares traded mostly in the green on Tuesday after Trump said a partial trade deal between Beijing and Washington could reach soon.
Trump told reporters that they are seeking to be ahead of schedule to sign a significant part of the China deal. They will call it Phase One, but it’s a considerable portion.
Markets now look ahead to Wednesday’s key interest rate decision from the U.S. Federal Reserve. Also, the Fed expected to deliver a third rate cut for 2019. While anticipation of another shot of the U.S. easing, gold could take a massive hit if the Fed agrees to leave rates unchanged this week.
Analysts will also be vigilant about the Bank of Japan’s policy decision on Thursday. The decision to unleash more stimulus or keep policy steady will be a close call.
President Trump’s tease of the probability of a faster-than-expected U.S.-China trade deal rained on the gold bulls’ parade before the Fed rate decision.
On Monday, both futures and spot prices of the gold drop below the main bullish level of $1,500 per ounce. This is after the president said he anticipates signing a significant part of a planned trade deal.
In post-settlement trade, U.S gold futures was down $12.65, or 0.8%, at $1,492.65.
Spot gold, which follows live trades in bullion, fell $14.10, or 0.9%, at $1,490.41.
Gold Prices on U.S.-China Trade Talks
Commodity markets strategist said there are comments from China recommending progress on the trade agreement and overall optimistic risk-on mentality in the markets. Thus, it makes sense to see safe-haven liquidation.
He also added if the economic mentality remains positive, it will take some vital event to see gold turn into a bull market. Also, he is not considering the trend to be truly bearish either.
Monday’s move in gold contradicts weaker data out of Beijing. It reinforced signs that the Chinese economy was weakening.
Profits at Chinese industrial firms drop for the second-straight month in September. Also, producer prices continued their move, according to the data. It highlighted the impact of a weakening economy and sustained the U.S. trade war on the corporate balance sheet.
Gold futures and bullion had stayed advanced over the previous week to regain the $1,500 handle that had been out of reach last two weeks. The catalyst for the revival had been Wednesday’s forthcoming Fed rate decision. It is where the U.S. central bank expected to approve a third-straight quarter-point rate cut for the year.
Moreover, while they are expecting another round of U.S. easing, gold could take a bigger hit if the Fed agrees to leave rates stable this week.
How bad that shot will be is still anyone’s guess. COMEX futures drop to $1,465 on Sept. 29. Also, spot gold fell to $1,459.15 on Oct. 1. The yellow metal could test those lows unless Brexit complications pierce again or the much-touted “phase one” of the U.S.-China trade deal does not get done.
