Gold Edges Up As US Greenback Faces Pressure on News of Sino-U.S. Trade Talks

Gold price edges up on subdued USD owing to Sino-U.S. trade related talks while investors look to US macro data for impetus to move forward.
Colin First
Gold Bars and Dollar
Gold Bars and Dollar

Gold prices on Thursday held steady near a more than one-week high hit in the previous session, with hopes for a new round of U.S.-China trade talks weighing on the dollar. Spot gold XAUUSD is trading at $1205.13 an ounce up 0.09% on the day after hitting its highest since Aug. 31 at $1,208.48 during late North American market hours last night while US Gold futures GCcv1 is trading at $1209.90 an ounce down 0.08% on the day. Senior U.S. officials sent an invitation to their Chinese counterparts to hold another bilateral trade meeting, raising speculation about a subtle shift in Washington’s policy.

The outreach comes as more than 85 U.S. industry groups launched a coalition on Wednesday to take a fight public against President Donald Trump’s trade tariffs.

The US Beats Saudi Arabia & Russia Becoming Top Producer of Crude Oil

The months-long trade rift between U.S. and China has prompted investors to buy the U.S. dollar in the belief that the United States has less to lose from the dispute. This has driven investors towards record short positions in Comex gold and heavy liquidations in gold exchange-traded funds. However, a shift in Washington’s trade policy could greatly affect Dollar’s momentum  despite support for US Greenback’s strength in broad market owing to fed rate hike expectations based on outcome of trade talks between US & China and any sign of weakness from Washington during the talks could end up damaging Trump’s reputation with public ahead of mid-term elections. Spot Silver XAGUSD is trading at $14.25 an ounce up 0.03% on the day.

Oil prices fell on Thursday, reversing some of the strong gains from the previous session, as economic concerns raised doubts about ongoing fuel demand growth. The falls came on the back of a potential slowdown in fuel demand growth because of trade disputes between the United States and China as well as emerging market turmoil. American companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey of hundreds of firms, prompting the U.S. business lobbies behind the poll to urge the Trump administration to reconsider its approach.

The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday reduced its forecast for 2019 global oil demand growth, pointing to economic risks. Meanwhile, the EIA on September 12 said that based on preliminary data and estimates, U.S. crude-oil output in February exceeded that of Saudi Arabia for the first time in more than two decades. While another report from U.S. EIA on Wednesday suggested U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production through 2019, maintaining its position as the largest producer in the world. Spot Crude WTIUSD is trading at $70.06/b down 0.64% on the day.

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