Gold And Silver Prices Down Amid Optimism For US-China Trade Deal

Precious metals opened the week with significant losses as investors welcomed news that the United States and China are close to reaching a trade deal.

Risk appetite is dominating the market with major stocks indexes up, and US Treasury yields up.

Gold and Silver are trading at levels not seen in several weeks with technical indicators signaling further declines expected. Oil is trading inside the range of the last days.

US-China trade deal close

Global optimism took markets amid news that US and China are close to reaching an agreement about trade, as reported by Bloomberg and WSJ.

In a piece published by Jenny Leonard, Bloomberg News trade reporter, the deal would lift most of all US tariffs imposed to Beijing applied since last summer.

In the same way, China will lower tariffs on US farm goods, autos, chemicals, and other products.

As exchange, China will not report the United States tariffs case to the World Trade Organization. Also, China would buy 18 billion dollars in gas from Cheniere Energy, a company in Houston.

According to Zhang Yesui, National People’s Congress’ spokesman, both countries “have conducted fruitful and intensive consultations and made important progress on many issues of common concern.”

Global markets cheered news about the imminent agreement; however, former White House and State Department official Philip Levy tweeted that the agreement does not mean significant advances for the US in its trade relationship with China

“This sounds a lot like agreeing to undo the tariffs applied since last summer, rather than solving any long-term problems,” Levy tweeted. “So the Trump administration is just putting out the fire they started.”

Gold down to lows since January

XAU/USD is trading negative on Monday as the metal is declining for the fourth day in a row amid global optimism on US-China trade deal and risk appetite.

Gold is now trading at 1,286.30, 0.54% negative so far on Monday, and at its lowest level since January 25.

The pair is consolidating and extending losses below the critical support at 1,303.08 which was broken on Friday, March 1st.

In a risk appetite environment, positive stocks markets, US Treasury yields, and strong Dollar, scoop is for more declines.

As James Hyerczyk, FX Empire analyst, said in a recent report, “the jump in Treasury yields also made the U.S. Dollar a more attractive investment, which drove down foreign demand for dollar-denominated gold.”

Hyerczyk sees XAU/USD falling to January lows and beyond. “the weekly chart indicates the market may be headed into $1279.60 to $1263.00. Since the main trend is up, buyers could step in on a test of this value area.”

Silver extends losses and trades at fresh 2019 lows

Silver is extending its losses for the fourth day in a row, and at after falling 0.50% on the day, XAU/USD is trading at 15.12, its lowest level since December 27.

XAG/USD is miming Gold chart pattern but deeper as the XAG/USD is also responding a rejection from the solid 16.21 resistance.

The unit declined 6.8% since February 27 rejection at the mentioned level or 1.12 dollars in just four trading days.

Pair is now testing the 200-day moving average around 15.18 with technical indicators suggesting more declines in the short-term.