Price of Gold Fundamental Daily Forecast – Next Major Move Hinges Upon Outcome of Trade Talks

Gold futures are edging lower on Friday following yesterday’s steep break on optimism the U.S. and China may reach at least a partial trade deal by the end of the day. A positive breakthrough over Brexit is also weighing on gold prices. Furthermore, the market is also being pressured by a sharp rise in U.S. Treasury yields.

At 10:52 GMT, December Comex gold is trading $1499.80, down $1.10 or -0.07%.

Surprisingly, gold traders are showing little reaction to a rocket attack on an oil tanker in the Middle East and a plunge in the U.S. Dollar, which usually drives up foreign demand for dollar-denominated gold.

Pressured by Positive Trade Developments

Shortly after the U.S. cash market opening on Thursday, President Donald Trump said he’s meeting with Chinese Vice Premier Liu He on Friday, fueling optimism about a positive outcome from this week’s high-level trade talks.

“Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House,” Trump said in a tweet Thursday.

Trump’s comment about a meeting with Liu contrasted with a report from the South China Morning Post that said the two sides made no progress in deputy-level trade talks this week and Liu will cut his visit short.

According to CNBC, “Day one of trade talks between top U.S. and Chinese negotiators ended with markets hoping for a limited trade deal and a delay to planned increases in U.S. tariffs planned for next week. U.S. President Donald Trump characterized the discussions as ‘very, very good’.

Reduced Concerns over Brexit

Gold’s gains are also being capped after positive comments on Brexit from the leaders of the Republic of Ireland and the U.K.

U.K. Prime Minister Boris Johnson met with his Irish counterpart Leo Varadkar for further Brexit talks Thursday afternoon, with subsequent comments encouraging investors to sell gold and buy risky assets..

Varadkar said a Brexit deal could be clinched by the end of October to allow the U.K. to exit the European Union in an orderly manner.

U.K. Brexit secretary Stephen Barclay is in talks with the EU’s chief Brexit negotiator Michel Barnier on Friday.

J.P. Morgan said Friday it had lifted its outlook for the chances of a Brexit deal from 5% to 50%.

Daily Forecast

Increasing demand for risky assets and higher Treasury yields are likely to keep pressure on gold prices. Of course, all this hinges upon positive developments today over U.S.-China trade relations.

Gold traders seem to be pricing in at least a partial trade deal. Prices could rally sharply if trade talks collapse later in the session.