· Gold prices were little changed on Thursday as investors maintained a cautious stance amid signs of a delay in Washington and Beijing signing a long-awaited interim trade deal.
Spot gold was trading at $1,491.27 per ounce, as of 0337 GMT.
· A senior official of the Trump administration told Reuters on Wednesday a meeting between U.S. and Chinese leaders to sign an interim trade deal could be delayed until December as discussions continue over terms and venue.
· “It (delay in U.S.-China trade deal) has added a bit of caution. Trade talks are going to go ahead and at the same time, the complicated issues in the deal have not yet been discussed, so the investors are in wait-and-see-mode,” said John Sharma, an economist with National Australia Bank.
“At the moment, there is not much to change it (gold’s direction), we will have to wait for some external factors, either geopolitical or economic to push it out of the range.”
· A tit-for-tat tariff war between the world’s two biggest economies for the past 16 months have roiled financial markets and raised fears of a global economic slowdown, helping the safe-haven bullion to rise more than 16% this year.
The dollar index, which has eased about 1.5% against a basket of rival currencies so far this week, made gold cheaper for investors holding other currencies, while Asian shares paused near multi-month peaks.
· “Sentiments are that some kind of deal will get done, also the Federal Reserve have said that they are not looking to do anything more this year (with interest rates), that is why gold is not reacting much,” Brian Lan of Singapore dealer GoldSilver Central said.
Last month, the Fed cut interest rates for the third time this year to help sustain U.S. growth despite a slowdown in other parts of the world, but signaled there would be no further reductions unless the economy takes a turn for the worse.
Lower interest rates reduce the opportunity cost for holding the non-yielding gold.
· Gold will trade in a range of $1,482-$1,518 an ounce in the short term, Lan said.
Meanwhile, the International Monetary Fund on Wednesday slashed euro zone growth forecasts.
· Gold struggles around 50-day EMA amid US-China trade jitters, USD strength
While broad strength of the US dollar (USD) exerts downside pressure on gold prices, uncertainty surrounding the US-China trade relations keeps the decline limited. As a result, the safe-haven seesaws near $1,490 amid initial Thursday morning in Asia.
Ever since the United States (US), monthly employment data flashed better than forecast readings of Friday, the USD bulls seem to have anticipated a stop to the Federal Reserve’s (Fed) further rate cuts. As a result, the greenback registers upbeat despite mixed macros and Fedspeak.
It’s worth mentioning that demand from India, among the world’s top bullion consumers, declines 32% in the third quarter (Q3) of 2019 as per the World Gold Council’s (WGC) recent trend report. The WGC also downgraded its Indian gold demand prediction for the whole 2019 year to around 700 tons, compared with 760 tons the previous year.
Over the US-China trade counter, the “Phase One” deal is likely delayed to December, as said by Reuters, but the story from Fox Business continues spreading optimism amid calls of the US likely to delaying December 15 tariff hike on China’s goods.
Comments from the Fed policymakers (Fedspeak) signal challenges to the economy but holds broad optimism surrounding the present monetary policy and expectations of future recovery.
While a lack of economic data prevails during the day, news concerning the initial trade agreement between the US and China could keep traders entertained.
Technical Analysis
While 50-day Exponential Moving Average (EMA) around $1,492 acts as immediate upside barrier, $1,500 and last week’s high near $1,515 could keep buyers capped then after. On the downside, $1,475 and $1,455 could keep the bullion’s short-term downside capped.
· Elsewhere, silver rose 0.1% to $17.63 per ounce. Platinum was unchanged at $929.35 per ounce and palladium dipped 0.2% to $1,788.86 per ounce.
Reference: Reuters,FXStreet
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