Spot Gold Sits at $1,500, Awaiting Direction on Trade War

Spot gold was sitting solidly on its $1,500 perch on Tuesday. Also, it helped by gloomy Brexit headlines and more U.S. data that invoked calls for another rate cut.

The real threat for longs in the yellow metal was figuring out when, and if a trade pledge between China and the U.S. would materialize. Besides, negotiations are due to start on Thursday to break down again from aggressive White House action.

For December, U.S. gold futures delivery settled down just 50 cents at $1,503.90 per ounce. Talks on avoiding a disorderly Brexit came intensely close to breaking down.

December gold was $4.20, or 0.3%, at $1,508.60 in post-settlement trade.

Reflective of trades in bullion, spot gold, was $9.92, or 0.7%, at $1,503.18.

After U.K. Prime Minister failed to persuade German Chancellor, Angela Merkel, in an early telephone call, the market saw new support. Boris’ proposals for avoiding border checks in Ireland could square with the EU’s aspiration for authority over the lines of its customs union and single market.

Moreover, on Oct. 29-30, a U.S. rate cut will happen if the Federal Open Markets Committee increases earlier after. Leaving the annual rate of factory-gate inflation at 1.4%, its lowest since 2016.

Comex gold investors were holding out without more evident leads in China.

Eric Scoles at RJO Futures in Chicago says gold is consolidating and do not expect a few dollars movement in price. Expect this until the upcoming U.S.-China trade talks offer positive or negative headlines.

Also, China toned down expectations ahead of high-level trade talks between the two countries. The Chinese delegation could abandon Washington a day before the schedule.

Spot Gold in World Gold Council

Spot gold ETFs and similar products had $3.9 billion of net inflows across all regions last month. It increased their collective holdings by 75.2 tons to 2,808 tons, the highest ever. Overall, global gold-backed ETF holdings risen by 13.4% to date, according to the WGC.

Back in late 2012, the gold price was adjacent to $1,700 per oz, 18% higher than today.

According to the WGC, Europe now reports for 44% of all ETF holdings. Also, Europe initially drove gold higher Tuesday after U.K. government sources briefed local media that a no-deal Brexit had become more likely.

After the Trump government placed eight of the country’s technology giants, China also signaled it would hit back. The blacklist is over alleged human rights violations against Muslim minorities.

Geng Shuang told reporters to stay tuned when asked if China would retaliate over the blacklist. Also, he denied that Beijing was guilty of human rights abuse in the far west region of Xinjiang.

Furthermore, tensions aggravated by a report that the U.S would impose a visa ban on Chinese communist officials.

On the physical gold front, North American investors are an addition to gold’s rally this year. Also, they add 62.1 tons to their holdings of the metal through exchange-traded funds in September. On the contrary, European investors bought earlier against a backdrop of Brexit concerns. Only 7.7 tons added to the European Central Bank’s negative interest rates.