Price of Gold Fundamental Daily Forecast – Edging Higher on Trade Deal Doubts

Gold prices are edging higher early Friday as traders return from yesterday’s U.S. bank holiday. Volume remains below average with some of the major players continuing in holiday mode. The price range is tight also, but there is some underpinning related to worries about whether the United States and China will seal a trade deal after President Donald Trump signed a legislation supporting Hong Kong protesters.

At 01:29 GMT, February Comex gold is trading $1463.00, up $0.90 or +0.05%.

Trump Signs Legislation Supporting Hong Kong Protesters

President Trump on Wednesday signed two bills into law that require the State Department to certify, at least annually, that Hong Kong retains enough autonomy to justify favorable U.S. trading terms.

In a statement released by the White House, Trump said, “I signed these bills out of respect for President Xi, China, and the people of Hong Kong. They are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all.”

China Condemns U.S. Legislation

Beijing condemned the move and said it would take “firm counter measures.”

China’s Ministry of Foreign Affairs said Thursday the U.S. has “sinister intentions” and its “plot” is doomed to fail,” after President Donald Trump signed two bills supporting Hong Kong protesters into law.

State media also published a statement from the Hong Kong liaison office, emphasizing its commitment to defending its “one country, two systems” policy.

“We are officially telling the U.S. and the handful of opposition politicians in Hong Kong who follow America’s lead to not underestimate our determination to protect Hong Kong’s prosperity and stability, don’t underestimate our belief to protect the ‘one country, two systems policy’ and don’t underestimate our capabilities and strategies in protecting our country’s sovereignty, safety, growth and rights,” the office said, according to a CNBC translation of an online-Chinese language statement.

“This so-called bill will only make the Chinese people, including our compatriots in Hong Kong, further understand the sinister intentions and hegemonic nature of the United States. It will only make the Chinese people more united and make the American plot doomed to fail,” China’s foreign ministry said in an online Chinese-language statement Thursday, according to a CNBC translation.

Daily Forecast

Gold is inching higher, Treasury yields are dipping and the Japanese Yen is up slightly. These are early signs that Friday’s session could feature a “risk-off” trade.

Trump’s signing of the Hong Kong bill is raising doubts that there will be any trade deal, even the so-called “Phase One.” The rise to record highs in the stock market suggests investors are counting on a deal before the end of the year. If stocks begin to retreat from their record levels and investors start to move money into the safe-haven Treasurys and Japanese Yen then gold prices are likely to be supported.