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James Hyerczyk
Comex Gold

Gold is trading lower on Thursday, pressured by a sharp rise in U.S. Treasury yields and greater demand for risky assets. A weaker U.S. Dollar is helping to slow down the selling pressure. The catalyst behind the price action is renewed optimism over U.S.-China trade relations as positive news about lower tariffs offset concerns above the timing and location of the signing of a potential trade deal.

At 11:54 GMT, December Comex gold is trading 1484.60, down $8.60 or -0.58%.

Gold inched higher on Wednesday after a senior official of the Trump administration told Reuters that a meeting between U.S. and Chinese leaders to sign an interim trade deal that could be delayed until December as discussions continue over the terms and the venue.

However, those slight gains were offset early Thursday when China’s Commerce Ministry said that Beijing had agreed with Washington to lift existing trade tariffs between the two economic powerhouses in phases.

Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster.

The ministry spokesperson said that both sides were closer to a so-called “phase one” trade agreement following constructive negotiations over the past two weeks.

One important condition for a limited trade agreement, Feng insisted, was that the U.S. and China must remove the same amount of charges at the same time.

Further adding to the pressure on gold is the softening in the tone toward aggressive rate cuts by the major central banks. Last week, the Federal Reserve cut rates as expected, but then signaled it would pause on additional rate cuts. The Bank of Japan followed shortly thereafter by holding policy steady. On Tuesday, the Reserve Bank of Australia left its benchmark interest rate unchanged, while signaling no further cuts and earlier today, the Bank of England held interest rates steady ahead of next month’s snap election.

Since holding gold doesn’t pay interest or a dividend, lower interest rates tend to make it a more desirable asset.

Daily Forecast

Gold is likely to be under pressure on Thursday as long as Treasury yields continue to rise and demand strengthens for higher risk assets.

On the data front, traders will get the opportunity to react to weekly unemployment claims, which are expected to come in at 215K, down slightly from last week’s 218K reading. A minor report on consumer credit is also scheduled. Today’s 30-year bond auction is expected to show a 2.17 percent yield. Gold could feel additional pressure later today if the bond auction yield comes in higher than the forecast.

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