· Gold prices edged lower on Friday as improved risk appetite amid signs of a thaw in the long-drawn U.S.-China trade tiff drew investors away from the safe-haven metal, while palladium retreated slightly from a record peak hit in the previous session.
Spot gold fell 0.1% to $1,496.81 per ounce as of 0313 GMT, declining about 0.6% this week in what could be its third straight weekly drop.
U.S. gold futures dipped 0.2% to $1,504.40 per ounce.
· “The heated-up environment between the U.S. and China has cooled off and so have (gold) prices,” said Sugandha Sachdeva, vice-president, metals, energy and currency research, Religare Broking.
The two sides have been making conciliatory gestures ahead of scheduled trade talks next month, lowering the temperature between them and cheering investors.
· U.S. President Donald Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as he said an “easy” agreement would not be possible.
Asian equities rose as hints of progress in trade talks between the world’s two top economies and aggressive stimulus from the European Central Bank helped buoy risk sentiment.
· The European Central Bank’s chief, Mario Draghi, pledged indefinite stimulus on Thursday to revive an ailing euro-zone economy.
The bigger-than-expected stimulus will increase pressure on the U.S. Federal Reserve and the Bank of Japan to ease policy next week to support a world economy increasingly characterized by low growth and protectionist threats to free trade.
“Next major wave of move in gold prices will be governed by the outcome of upcoming Fed meet... That said, prices are likely to gyrate between $1,480-$1,550 per ounce in the immediate short term,” Sachdeva said.
· Gold remains below $1500 as US-China goodwill efforts regain market attention
Following the ECB decision and US CPI-led crazy Thursday, Gold prices stays on the back foot while taking rounds to $1,498 during Friday’s Asian session.
Markets shifted their attention back to the US-China goodwill gestures that have been limiting the safe-haven demand off-late. Among the baby-steps, delayed tariffs from the US, readiness to buy more of the US agricultural products by China, and upbeat statements from the US President Donald Trump and Treasury Secretary Steve Mnuchin gained major attention.
Sellers might also have emphasized the US President Trump’s comments that he is considering North Korea and Iran’s proposal to talk, which in turn could recede the geopolitical tension.
Technical Analysis
FXStreet Analyst, Ross J Burland, spots pin bar on the daily chart as a bearish signal while saying:
The 21-day moving average was pierced but only momentarily and there has been a bearish pin bar left on the daily chart, signaling further downside to follow. Indeed, the price remains below the 23.6% Fibonacci (Fibo) retracement of the July lows to recent swing highs as well as trading below the psychological 1500 handle. Below the 1,480 target, 1,478 comes as the 13 August volatility spike low which guards the 19 July swing highs at 1,452.93. Bulls will need to get back above 1,550 which then guards prospects for 1,590 as the 127.2% Fibo target area.
· Meanwhile, palladium fell 0.6% to $1,608.69 per ounce, after hitting an all-time high of $1,621.55 on Thursday as possible labor issues in South African mines stoked supply concerns.
The auto catalyst metal was on track for a sixth straight weekly gain, its longest winning streak since 2016.
· Among other precious metals, silver shed 0.3% to $18.05 per ounce, while platinum dropped 0.5% to $946.40. Platinum has declined about 0.2% in the week after three consecutive weekly gain.
Reference: Reuters, FX Street
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