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James Hyerczyk
Comex Gold

Gold prices are under pressure on Thursday shortly before the regular session opening after a deal was reached between the UK and EU over Brexit. Shortly after the news broke, demand for risky assets increased, while investors shed positions in safe-haven gold, Japanese Yen and Treasury bonds. The U.S. Dollar was crushed against a basket of currencies as investors continue to aggressively liquidate previously placed hedges.

At 10:51 GMT, December Comex gold is trading $1490.30, down $3.70 or -0.25%.

Brexit Deal in Place, but Johnson Still Needs Parliament Approval

After holding steady for several days, gold prices retreated on Thursday after European Commission President Jean-Claude Juncker said Britain had clinched a Brexit deal with the European Union, just a few hours before the start of a summit of the bloc’s leaders in Brussels.

Separately, British Prime Minister Boris Johnson said “we have a great new Brexit deal”.

Nonetheless, the next challenge for Johnson will be getting approval in the British Parliament especially from Northern Ireland’s Democratic Union Party (DUP).

Johnson said in a tweet that the new deal, which replaces the one struck by his predecessor Theresa May, “takes back control.” Johnson also urged Parliament to “get Brexit done on Saturday” when lawmakers are next due to meet.

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U.S.-China Trade Relations

Although a general lack of clarity over the partial trade deal between the United States and China on Friday has been weighing on prices all week, investors were a little more upbeat early Thursday after U.S. Treasury Secretary Steven Mnuchin said U.S. and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month. This helped put a lid on gold prices.

Daily Forecast

Gold will remain under pressure on Thursday if investors continue to demand risk. If they change their minds later in the session due to the release of weaker-than-expected U.S. economic data then look for gold to recover. We saw this on Wednesday when gold rallied in response to a disappointing U.S. retail sales report.

Today’s major report is the Philly Fed Manufacturing Index. It is expected to come in at 7.3, down from the previously reported 10.0.

Minor reports include Building Permits, and Industrial Production.

Weak U.S. economic data could drive up the chances of an October Fed rate cut. This would further weaken the U.S. Dollar, which would make gold a more attractive investment to foreign investors.

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