· Gold prices edged lower on Wednesday after U.S. President Donald Trump’s comments that Washington was close to an interim trade deal with China boosted demand for riskier assets.
Spot gold fell 0.1% to $1,459.20 per ounce by 0313 GMT. Prices touched a two-week low of $1,450.30 in the previous session. U.S. gold futures shed 0.1% to $1,459.30.
· Washington and Beijing are close to an agreement on the first phase of a trade deal, Trump said on Tuesday, after top negotiators from the two countries agreed to keep working on remaining issues.
· “Everyone is very optimistic that there was a phone call between (U.S.-China trade) negotiators,” Ilya Spivak, a senior currency strategist at DailyFx said.
Asian shares ticked higher after Wall Street crawled to new record closing highs on positive trade news, while the dollar rose.
However, “at this stage, the markets are not going to have any significant response in terms of lasting follow through unless there is ink on paper or any kind of tangible development,” Spivak said.
· Investors were still wary that bills passed by the United States supporting anti-government protesters in Hong Kong will complicate negotiations.
· On China’s industrial front, data showed profits of firms fell to their steepest in 8 months in October.
This comes after U.S. consumer confidence fell for a fourth straight month in November.
Nonetheless, safe-haven bullion, which has gained more than 13% this year, mainly due to the tariff dispute, was little moved.
· “If the U.S. Federal Reserve has already signalled that they are not going to continue to cut interest rates as they have, then soft data means nothing for gold,” Spivak added.
The central bank cut interest rates three times this year before pausing. Lower rates reduce the opportunity cost for holders of bullion, an asset that yields no interest.
· “The safe haven asset, though indicating resilience, continues to face considerable headwinds as global risk appetites stay vigorous over positive signals in the U.S.-China trade front,” Phillip Futures analyst Benjamin Lu said in a note.
· Market participants are now awaiting U.S. GDP and the Fed’s Beige Book of economic condition among other data due later in the day.
· Technically, December gold futures closed up $3.00 at $1,460.00 today. Prices closed nearer the session high and scored a mildly bullish “outside day” up today. The bears still have the slight overall near-term technical advantage as prices have been trending lower for 11 weeks. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,500.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,425.00. First resistance is seen at $1,465.00 and then at $1,475.00. First support is seen at today’s low of $1,449.60 and then at the November low of $1,446.20. Wyckoff's Market Rating: 4.5
· The latest pullback from 23.6% Fibonacci retracement of late-October to early-November fall drags Gold prices downward to $1,459.70 during early Wednesday.
With this, the metal’s another drop to November 12 top near $1,457 becomes imminent. Though, monthly low surrounding $1,445 will restrict the bullion’s further declines.
In the case where the quote declines below $1,445, June month top close to $1,439 will be up for grabs by sellers.
Alternatively, resistance line of one-week-old falling wedge bullish formation, near $1,465, will be the key to watch as a break of which can trigger short-term recovery targeting 200-bar Simple Moving Average (SMA) and 50% Fibonacci retracement, around $1,482.
Given the bull’s dominance past-$1,482, November 06 top of $1,494 will become their favorite.
· Elsewhere, silver fell 0.2% to $17.04 per ounce, palladium shed 0.2% to $1,805.53 per ounce and platinum was down 0.3% to $904.32.
Reference: Reuters, FX Street, Kitco
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