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James Hyerczyk
Comex Gold

Gold is being pressured on Monday by renewed optimism over U.S.-China trade relations. The catalyst behind the move was the willingness of the two economic powerhouses to sign an initial trade deal by year end. The news is boosting investor sentiment, while driving investors into higher-yielding assets like stocks. U.S. Treasury yields are also rising, helping to make the U.S. Dollar a more attractive asset, while driving down demand for the safe-haven U.S. Dollar.

At 12:41 GMT, December Comex gold futures are trading $1457.10, down $6.50 or -0.44%.

U.S.-China Trade Talk Update

According to CNBC, adding to the positive mood around the trade negotiations was the weekend announcement that China would seek to improve protections for intellectual property rights, a move seen to address a sticking point between the parties.

However, traders are still a little cautious about a trade deal being reached over the near-term after Reuters reported that U.S. and Beijing officials and lawmakers and trade experts said an ambitious “phase two” trade deal looked less likely.

Furthermore, the U.S. is still scheduled to raise tariffs on December 15 in a move that could cause renewed tensions between the two trade war participants.

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Safe-Haven Gold Buyers Burned Again

Safe-haven gold buyers are licking their wounds on Monday after Hong Kong’s democrats scored a landslide majority in district council elections, which saw a record turnout after six months of anti-government protests. The news increased pressure on the Chinese-ruled city’s leader on Monday to listen to calls for democracy.

Speculative buyers are shedding gold positions in anticipation of an easing of tensions in Hong Kong.

U.S. Market Influence

Treasury prices were lower and yields higher on Monday to start a shortened holiday week as investors continue to monitor developments on a U.S.-China trade deal.

U.S. stock index futures were slightly higher Monday as Wall Street looked for the market’s rally to record highs to resume amid increasing expectations that China and the U.S. will reach a so-called phase one trade deal.

Daily Forecast

On the data front, Dallas Fed manufacturing figures for November will be released at around 15:30 GMT.

Federal Reserve Chairman Jerome is giving a speech early Monday. He is expected to reiterate a steady outlook for rates after better-than-expected manufacturing output and services activity data on Friday. Those reports seemed to confirm the Federal Open Market Committee was right in deciding to pause on future rate cuts after trimming its benchmark rate by 25 basis points on October 30.

Gold could see a little counter-trend buying on a test of $1456.60, but if this price level fails then look for a potential acceleration into the $1446.20 main bottom.

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