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James Hyerczyk
Gold Bars and Dollar

Gold futures are being pressured on Friday by positive comments from a key White House official, which have reignited hopes of a U.S.-China trade deal, while boosting appetite for higher risk assets. Nonetheless, the selling is a little tentative, allowing the market to hold on to its slim weekly gains.

At 14:32 GMT, December Comex gold is trading $1465.80 down $7.60 or -0.53%.

Hopes of a trade deal between Washington and Beijing drove down demand for safe-haven assets such as U.S. Treasurys, which drove up yields. Traders also shed protection in the Japanese Yen and gold, leading to today’s weakness.

Gold Reacts to Ever-Changing U.S.-China Trade News

This week has been filled with a few headlines regarding trade issues but nothing hard-hitting enough to think a partial-trade deal was imminent. Nonetheless, the news was negative enough at times to turn around gold after the market was hammered last week.

The week started with worries that President Donald Trump had not agreed to the rollback in tariffs that a China announced on November7. Last Friday, Trump said, “China would like to get somewhat of a rollback, not a complete rollback, ‘cause they know I won’t do it. I haven’t agreed to anything.”

Then on November 12, President Trump said the United States will increase tariffs on Chinese goods if the first step of a broader trade agreement isn’t reached.

On November 13, CNBC said, “The high-stakes trade negotiations between the U.S. and China are running into trouble as the two countries attempt to finalize a limited trade agreement.”

The Wall Street Journal first reported the roadblock in the trade talks, adding China is hesitant to commit to a specific amount of agricultural products in the text of a potential deal.

On November 14, Chinese Ministry of Commerce spokesman Gao Feng said that both countries are holding deep discussions about a “phase one” deal, but noted that the rolling back of some tariffs is key to reaching an agreement.

“The trade war was begun with adding tariffs, and should be ended by canceling these additional tariffs. This is an important condition for both sides to reach an agreement,” Fend said Thursday at a weekly press conference.

Later on Thursday, White House economic adviser provided another ray of hope when he said negotiations over the first phase of a trade agreement with China were coming down to the final stages, with the two sides in close contact.

Speaking after an event at the Council on Foreign Relations late Thursday in Washington, Kudlow told reporters that a deal was close though “not done yet.”

“We are coming down to the short strokes,” Kudlow said. “We are in communication with them every day right now.”

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Traders are reacting strongly to Kudlow’s comments and gold is being pressured accordingly. It seems President Trump can say all he wants, but the market tends to listen more intently to what Kudlow has to say.

On the economic side, the U.S. economic data was bleak with Core Retail Sales coming in below expectations. The Empire State Manufacturing Index was weaker than expected along with the Capacity Utilization Rate and Industrial Production.

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