· Gold prices were little changed on Tuesday, hovering around the key $1,490 an ounce level as progress in China-U.S. trade talks sent equities soaring, while anticipation ahead of major central bank meetings in the week provided some support.
Spot gold eased 0.1% to $1,491.72 per ounce as of 0537 GMT, after shedding nearly 1% in the previous session. U.S. gold futures dropped 0.1% to $1,494 an ounce.
· U.S. President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule.
Further more, the United States Trade Representative, the lead U.S. trade agency, said there could be an extension on tariff suspensions on $34 billion of Chinese goods set to expire on Dec. 28 this year.
· Wall Street jumped to an all-time peak after the statements on Monday, while Asian shares scaled a three-month high in early trade on Tuesday.
· “There is a broad risk-on sentiment, with U.S. equities hitting a fresh record high. The trade talks are highly unpredictable... It has disappointed investors many times in the past and may repeat again,” said Margaret Yang Yan, a market analyst at CMC Markets.
“The market is very positive about it right now, but that also means it is very vulnerable.”
Gold was far from losing its sheen, analysts said, as a dearth of clarity on trade talks and Britain’s divorce from the European Union (EU) still loomed large.
· The EU agreed to a Brexit delay of up to three months, but Brexit hangs in the balance, with British politicians still arguing over how, when or even whether the divorce should take place at all.
· Investors also braced for another dose of policy stimulus from the U.S. Federal Reserve this week, where it is expected to cut rates for a third time in a row when it concludes its two-day meeting on Wednesday.
· Central banks in Japan and Canada are also scheduled for policy meetings this week, with the former leaning toward keeping monetary policy steady.
Lower interest rates make gold attractive as it reduces the opportunity cost of holding the metal.
· With gold prices trading above the $1,500 an ounce level, the precious metals market could be disappointed come the Federal Reserve rate announcement on Wednesday, according to TD Securities. “Precious metals have held firm given the surge in equities and the Brexit extension, and are likely to trade in a holding pattern heading into key risk events this week. With prices back above $1,500/oz the gold market may be set up for disappointment heading into the FOMC, where we expect a somewhat hawkish cut,” strategists at TD Securities write. Lack of dovishness in the tone of the Federal Reserve could put pressure on gold, they add. “Our macro team is looking for the committee to communicate patience in deciding future policy moves as they assess the impact of the three cuts they have already delivered and look for the Fed to temporarily pause before resuming rate cuts in Q1 2020, which could see the yellow metal look for the lower bound of the range in the near term.”
· Diwali gold sales in one of the world's top gold consuming nations disappointed over the weekend as high prices weighed on gold demand, analysts said.
The Diwali celebrations, known as the Festival of Light, were in full swing this past weekend. Still, consumers were bogged down by surging domestic gold prices, which kept purchases restrained, despite the auspicious time to buy jewelry, said SP Angel.
"The Indian community celebrated the Diwali festival yesterday," analysts at SP Angel wrote on Monday. "India Today reports that sales fell by as much as 40% due to higher gold prices and lower consumer activity on Dhanteras day, the most auspicious day in the Hindu calendar."
· Among other precious metals, palladium dropped 0.1% to $1,798.18 an ounce, not far from a record high of $1,808.81 hit in the previous session, as supply concerns continue boosting the autocatalyst metal’s appeal.
· Silver fell 0.4% to $17.79 per ounce and platinum shed 0.6% to $913.26 an ounce.
Reference: Reuters,Kitco
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