· Gold retreated from an over one-month peak in a volatile session on Thursday after U.S. President Donald Trump said Washington was close to a trade deal with China, denting the safe-haven metal’s appeal.
· Scarce palladium’s record surge, meanwhile, showed no signs of abating.
· Spot gold dropped 0.44% to $1,468.31 per ounce. Prices hit their highest since Nov. 7 at $1,486.80 earlier in the session. U.S. gold futures settled down 0.2% at $1,472.3.
· Trump said the U.S. was “very close” to nailing down a deal with China, helping world stocks soar to a record, and taking some steam off gold’s initial rally driven by the trade uncertainties ahead of a Dec. 15 deadline when new U.S. tariffs on Chinese goods come into effect.
· ″(Trump’s) tweet saw risk appetite bid, with capital flowing to equities. The problem for gold is that when everything else looks good, there’s less incentive to move into gold, which is what we’ve seen,” said Bart Melek, head of commodity strategies at TD Securities.
Also on investors’ radar was the British election, which will pave the way for Brexit under Prime Minister Boris Johnson or propel Britain towards another referendum that could ultimately reverse the decision to leave the European Union.
While major opinion polls suggest Johnson will win, any surprises could add further support to bullion, analysts said.
· Technically, the gold bulls and bears are on a level overall near-term technical playing field amid choppy and sideways trading recently. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,500.00. Bears' next near-term downside price breakout objective is pushing futures prices below solid technical support at the November low of $1,453.10. First resistance is seen at $1,480.00 and then at today’s high of $1,491.60. First support is seen at this week’s low of $1,463.00 and then at $1,456.60. Wyckoff's Market Rating: 5.0
· Gold should benefit from continued “ultra-loose” monetary policy in 2020, rising to an average price of $1,550 an ounce in the fourth quarter of the New Year, Commerzbank said Tuesday.
Gold has backed down from its early-September high just shy of $1,560 an ounce, but still remains 14% stronger for the year, Commerzbank pointed out. This would be the strongest annual gain since 2010. The metal last traded at $1,465.80 an ounce.
“We envisage an increase to $1,550 per troy ounce by the end of 2020,” the bank said. ”The high optimism among speculative financial investors and the subdued demand in Asia will initially preclude any higher prices, so we expect to see the lion’s share of the upswing in the second half of the year.”
In fact, Commerzbank expects another Fed rate cut in the second quarter. Further, analysts pointed out that since mid-October, the Fed has been buying short-term Treasury bills worth $60 billion per month. Meanwhile, the European Central Bank and Bank of Japan are also buying bonds.
“Thus the world’s three most important central banks will be keeping their feet firmly on the accelerator for the foreseeable future as far as printing money is concerned,” Commerzbank said.
Commerzbank said gold should also benefit from a weaker U.S. dollar in 2020, calling the currency “fundamentally overvalued.” Meanwhile, Commerzbank pointed out, central-bank gold buying should remain strong, with official-sector buying of nearly 550 metric tons after the first three quarters of this year.
Commerzbank looks for gold demand to pick up in the two largest markets in the world – China and India – helped by a decline in local prices. Further, plentiful rainfall in India in recent months means improved prospects for crops, important to gold since much of the demand in the country is from rural areas.
· Palladium, meanwhile raced to a fresh all-time high of $1,944 in the session, up 1.2% at $1,933.73 an ounce.
· The metal, set for a 15th straight gain, surpassed $1,900 for the first time on Tuesday as mines in major producer South Africa shut after flooding triggered severe power blackouts.
· “Palladium has been one of the stars of not just the metals, but the commodities arena overall for the year,” said David Meger, director of metals trading at High Ridge Futures.
“Just the power outages bring about more supply constraints to what is already a tightly supplied market with strong demand.”
· Platinum was little changed at $938.80 an ounce, while silver was down 0.2% to $16.82.
Reference: CNBC, Kitco
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