Last updated on October 20th, 2019 at 11:18 am
The price of gold was pulled down close its lowest level in two months by a stronger dollar on Tuesday, October 1, 2019. The yellow metal’s appeal to investors was also dented by the optimism about the Sino-U.S. trade negotiations.
U.S. gold futures dropped by 0.3% to $1,478.90 an ounce. Spot prices slipped to its lowest level since August 6 at $1,460.25 at the start of the trading session before finally settling at $1,462.86.
The U.S. dollar has reached its highest valuation in more than two years against major currencies. Traders and investors are watching out for the release of the September manufacturing data to get an insight as to how the Federal Reserve would react to maintain economic growth.
CMC Markets chief market strategist Michael McCarthy says the price of gold has been significantly affected by the possible further strengthening of the dollar and the expected resolution of the U.S.-China trade dispute. He explains that the precious metal has already gone down below support level of $1,480-$1,490 and this is enough condition to encourage investors to go into a selling mode.
The positive outlook of the U.S.-China trade talks also pushed up the Asian stock markets. The two parties are scheduled to resume high-level negotiations in Washington next week.
Hareesh V., Geojit Financial Services’ head of commodity research, predicts that the easing of tensions between the two largest economies may drive down gold prices to $1,420 per ounce. He expects the bullion to remain unstable and volatile while the market waits of the outcome of the trade talks in October.
In a related development, the holdings of the largest gold-backed exchange-traded fund SPDR Gold Trust declined by 0.22% to 920.83 tons.
On the technical aspect of trading, Reuters’ analyst Wang Tao predicts that spot prices are likely to go below its support pricing level of $1,462 an ounce and slide down further to $1,446.