Price of Gold Fundamental Daily Forecast – Positive News About US-China Trade May Weigh on Prices

Supporting gold prices recently has been the weaker U.S. Dollar. The greenback has been under pressure since late December when the Fed hinted it may take a pause in monetary policy in 2019. The led investors to believe the central bank would not raise rates. Treasury yields have been falling on the news, taking the U.S. Dollar with it while driving up demand for dollar-denominated gold.
James Hyerczyk
Comex Gold
Comex Gold

Gold futures are trading slightly higher on Monday after reaffirming the short-term uptrend with a rally to $1286.50.  The weaker U.S. Dollar and lower Treasury yields are helping to underpin prices, however, increased demand for risky assets may helping to put a lid on those gains. Although gold managed to hit a new six-month high earlier in the session, it’s still on pace to post its first annual loss since 2015.

At 1421 GMT, February Comex gold is trading $1282.50, down $0.50 or -0.05%.

Traders are saying gold may be feeling pressure from the by hints of progress on a possible U.S.-China trade deal, with U.S. President Donald Trump saying he had a “very good call” with Chinese President Xi Jinping, helped bolster sentiment for oil.

Trump also tweeted that negotiations were “moving along very well” toward a comprehensive deal, while Chinese state media said Xi believed both sides wanted “stable progress.” Xi said ties had reached a “vital stage” on the 40th anniversary of the U.S.’s establishment of formal ties with China and the world expected the two sides to work together, according to the official Xinhua News Agency.

Forecast

Supporting gold prices recently has been the weaker U.S. Dollar. The greenback has been under pressure since late December when the Fed hinted it may take a pause in monetary policy in 2019. This led investors to believe the central bank would not raise rates. Treasury yields have been falling on the news, taking the U.S. Dollar with it while driving up demand for dollar-denominated gold.

Another factor providing support for gold has been the uncertainty created by the lingering trade war between the United States and China. The trade dispute has raised issues over the strength of the global economy. The longer the dispute lasts, the greater the chances of a global economic recession. This tends to pressure interest rates which makes gold a more attractive investment.

While not a trend changing event at this time due to the concerns over U.S. interest rates, an end to the trade dispute with China could be bearish for gold prices because it would lift the need for safe-haven protection and reduce the odds of a global economic slowdown.

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