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James Hyerczyk
Comex Gold

Gold futures finished lower last week with a dramatic sell-off on Friday doing the most damage to the precious metal. Last week’s price action was primarily fueled by concerns over U.S.-China trade relations and U.S. economic data.

As usual, worries over the lack of progress toward a trade deal were bullish for gold prices, while optimism over a deal capped gains. Weaker-than-expected U.S. economic data was also supportive, but stronger-than-expected reports drove investors out of the market.

Last week, February Comex gold settled at $1465.10, down $7.60 or -0.52%.

Gold prices were influenced throughout the week by the U.S. Dollar, Treasury yields and demand for risky assets.

Whipsawed by US Economic Data

Gold rallied early in the week in reaction to weaker-than-expected ISM Manufacturing PMI data which fell further into contraction territory for the fourth straight month to a near decade-low level.

By the end of the week, gold was trading lower following a robust report on U.S. labor markets and the stunning report on consumer sentiment. Both reports underscored the overall health of the U.S. economy.


US – China Trade Updates Create More Uncertainty

Beijing and Washington continued to negotiate a first phase trade deal aimed at de-escalating the trade dispute between the two economic powerhouses, but they also continued to bicker over key details.

Late last week, Chinese officials held fast to their line that existing tariffs must come off as part of an interim deal. However, China did offer an olive branch by waiving import tariffs for some soybeans and pork shipments from the United States.

Top White House economic adviser Larry Kudlow said on Friday that a December 15 deadline is still in place to impose a new round of U.S. tariffs on some $156 billion of China’s remaining exports to the United States, but the president likes where trade talks with China are going, he added.

China, however, countered with a threat of its own, with one Chinese official telling Reuters that China will implement its own tariffs as a countermeasure if the December 15 tariffs go into place, which may dash any chance of a near-term trade deal.

Weekly Forecast

This week, the Fed meets again to announce its rate policy after cutting the Federal Funds rates three time in 2019 to between 1.50 – 1.75%. Look for the Fed to hold rates steady.

Gold traders will get the opportunity to react to U.S. data on consumer inflation and retail sales, however, these reports are not likely to change the Fed’s view on the economy.

Traders will be looking for clues as to what policymakers have to see before cutting or raising rates in 2020.

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