Price of Gold Fundamental Daily Forecast – Hedge Buyers Return as Investors Turn Negative on ‘Phase One” Trade Deal

Gold futures are trading higher on Monday shortly before the regular session opening after reversing earlier weakness. The catalyst behind the turnaround was a Bloomberg report that said China needed to have further discussions before it would sign off on the so-called “phase one” trade deal U.S. President Trump touted on Friday.

At 11:16 GMT, December Comex gold is trading $1499.80, up $11.10 or +0.74%.

According to people familiar with the matter, Bloomberg News reports, “Beijing may send a delegation led by Vice Premier Liu He, China’s top negotiator, to finalize a written deal that could be signed by the presidents at the Asia-Pacific Economic Cooperation summit next month in Chile, one of the people said. Another person said China wants Trump to also scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn’t yet endorsed. The people asked not to be named discussing the private negotiations.”

On Friday, gold futures ended sharply lower as it lost its appeal as a “safe-haven” asset after President Trump announced that the first phase of a deal with China had been agreed.

Daily Forecast

Gold could continue to rally on Monday if today turns into a full-blown “risk-off” session with investors shedding risky assets and hedging their exposure in gold, Treasury bonds and Japanese Yen.

The Bloomberg News report wasn’t a complete surprise with several major analysts questioning its materiality shortly after Trump announced the trade deal on Friday. Many said the agreement lacked substance and would have little impact on the global economy as long as the tariffs currently in place remained intact.

Over the weekend, Chinese state media warned the U.S. to “avoid backpedaling” on the partial trade agreement, and expressed caution about the initial phase of the deal which President Trump called “very substantial.”

“While the negotiations do appear to have produced a fundamental understanding on the key issues and broader benefits of friendly relations, the Champagne should probably be kept on ice, at least until the two presidents put pen to paper,” said China Daily on Sunday.