Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Gold Dips as Trade-Deal Hype Returns Again

Published 11/15/2019, 03:03 PM
Updated 11/15/2019, 03:04 PM
© Reuters.

By Barani Krishnan

Investing.com – LIke a scratched record the prospective trade deal is deciding the outcome on all markets.

Friday’s yes-we-are-closing-in-on-a-deal comments knocked gold lower and sent Wall Street to record highs.

Gold futures for December delivery on New York’s COMEX settled down $4.90, or 0.3%, at $1,468.50 per ounce.

Spot gold, which tracks live trades in bullion, slipped by $4.75, or 0.3%, to $1,466.20 per ounce by 2:23 PM ET (19:23 GMT).

Gold had proven a safe-haven hedge during the 16-month-long trade war, hitting six-year highs above $1,500.

On Thursday, both bullion and gold futures rose 0.7% after apparent disagreement over how much China will spend on U.S. farm products for a deal, and when and how tariffs imposed earlier this year and possibly boosted next month will be rescinded.

But in Friday’s trade, ebullience was back after White House economic advisor Larry Kudlow said that negotiators in Washington and Beijing were close to securing a deal.

All three major stock indexes on Wall Street also hit record highs after Commerce Secretary Wilbur Ross said U.S. and Chinese officials would hold a call later in the day, although the White House could still impose new tariffs on Chinese goods, scheduled a month from now.

Despite the broad appetite for risk, gold’s downside was still limited Friday by some investors’ thinking that the trade deal might be some way off. Chinese media, on Friday fleshed out arguments that Chinese demand for U.S. farm products is nowhere near the level of purchases that Washington is insisting on in order to seal a partial phase one deal.

“For investors, the impetus to buy gold as opposed to stocks is increasingly hard to justify with U.S. equities printing new all-time highs, making loss-aversion a tough sell,” analysts at TD Securities said in a note.

“But as yields have also begun to creep lower — holding onto the downtrend formed by end of the hiking cycle — precious metals prices have remained resilient, despite being at a risky juncture with the Fed now on pause.”

Gold fell off the bullish $1,500 perch after Federal Reserve Chair Jay Powell suggested that the U.S. central bank’s third straight rate cut of a quarter point in October would be its last for the year.

TD Securities said while gold funds may have liquidated some of their long holdings in the yellow metal, “the bar is high for machines to add further selling pressure, and aggregate open interest still sits at all time highs.”

“Our estimated breakeven entry point for the bulls stands in the $1440/oz range, which suggests that a break below that range would be required for prices to be dragged lower by a decline in open interest. We contend that the pain trade is still to the downside in the near-term.”

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.