· Gold prices were trading in a narrow range on Tuesday as investors stayed on the sidelines, even as U.S. President Donald Trump’s move to slap tariffs on Brazil and Argentina stoked fresh global trade tensions.
Spot gold slipped 0.1% to $1,460.92 per ounce by 0506 GMT. U.S. gold futures fell 0.2% to $1,466.60.
Trump on Monday announced tariffs on U.S. steel and aluminium imports from Brazil and Argentina “effective immediately,” opening new fronts in his trade war.
· “The only reason prices have not risen is because the investment demand for gold is not there,” said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers.
“In SPDR gold exchange-traded funds (ETF), flows have reduced, investor demand has faltered and that is why gold prices have not reacted to the uncertainties to the trade matters,” he said.
· Holdings of the world’s largest gold-backed ETF, SPDR Gold Trust, fell 0.7% to 889.16 tonnes on Monday, their lowest since Sept. 19.
· Speculators also cut their bullish positions in COMEX gold in the week to Nov. 26, data showed on Monday.
· “People are expecting U.S.-China trade war to de-escalate, plus the U.S. Federal Reserve has signaled that there will be no further rate cuts unless there is a U-turn in the economy, so sentiment will be bearish (in gold),” Trivedi said.
· Gold has risen more than 13% so far this year, mainly due to the 17-month-old trade dispute.
Trump on Monday said U.S. legislation backing protesters in Hong Kong did not make trade negotiations with China easier, but added he believes Beijing still wants a deal.
· “The metal continues to hold range bound heading into year-end, seemingly well supported around $1,450, however lacking any meaningful demand to break top-side resistant through $1,465 - $1,470 and $1,480 the key level above this,” analysts at MKS PAMP said in a note.
· Asian shares fell on Tuesday after U.S. President Donald Trump stunned markets by imposing tariffs on imports from Brazil and Argentina, rekindling fears over global trade tensions, while weak U.S. factory data added to the investor gloom.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.43% as Australian shares recorded their worst day in two months with a 2.2% drop.
But some Asian indexes rebounded in afternoon trade from session lows.
In tweets on Monday, Trump said he would impose tariffs on steel and aluminium imports from Brazil and Argentina, attacking what he saw as both countries’ “massive devaluation of their currencies.”
Contrary to his remarks, both Brazil and Argentina have been trying to strengthen their respective currencies against the dollar.
· Japan’s Nikkei average dropped on Tuesday, as concerns about global trade revived after U.S. President Donald Trump slapped tariffs on Brazil and Argentina, while weak U.S. manufacturing data also dented sentiment.
The Nikkei share average closed down 0.64% at 23,379.81. It had fallen as much as 1.46%, to 23,186.84, but managed to end the day above its 25-day moving average of 23,249, a key technical level.
On Monday, Trump said he would impose tariffs on steel and aluminium imports from Brazil and Argentina, raising worries he could also re-escalate trade tensions with China.
· China stocks reversed course to end higher on Tuesday, led by gains in consumer and financial shares, as investors chased firms with low valuations following recent upbeat factory data.
The blue-chip CSI300 index rose 0.4% to 3,851.09, while the Shanghai Composite Index closed up 0.3% at 2,884.70.
Market was also underpinned by robust northbound inflows via the Stock Connect linking Hong Kong and Shanghai, which totalled 4.6 billion yuan for the day, as foreign investors increase their China exposure.
· European stocks were higher Tuesday morning despite an escalation of global trade tensions during the previous session.
The pan-European Stoxx 600 was up by 0.4% shortly after the open, with most sectors trading in the black. Chemicals and tech stocks were among the top-performing sectors.
· Gold prices look for clear direction around $1,463, trade pessimism prevails
Following a downbeat start to December, Gold prices await further clues near $1,463 amid Tuesday’s Asian session. That said, the mixed plays of trade war risk, doubts over the Fed’s action and a pullback in the US Dollar Index (DXY) seem to trouble the market watchers by the press time.
Technical Analysis
A monthly downward sloping trend line and 21-day Simple Moving Average (SMA) around $1,466 act as immediate resistance holding the gate for the bullion’s rise to November 20 high of $1,479. Meanwhile, $1,450 and the previous month low near $1,445 can entertain sellers during the declines.
· Elsewhere, palladium was down 0.1% at $1,851.09 per ounce, after scaling an all-time peak in the previous session at $1,861.71.
Silver was flat at $16.90, while platinum was unchanged at $897.65.
Reference: Reuters,FXStreet
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