Gold prices decline on dollar strength and uncertainties in trade talks

Gold

Last updated on October 20th, 2019 at 11:13 am

The prices of gold fell on Monday, 30 September 2019, as worries about the U.S.-China trade negotiations drove up the value of the dollar.

U.S. gold futures lost 0.6% and settled at $1,496.60 an ounce. Spot prices went down by 0.4% to $1,490 an ounce.

The dollar index reached close to its one-week high. Generally, gold prices drop when the value of the U.S. dollar increases.

According to AxiTrader market strategist Stephen Innes, the outlook of the yellow metal remains positive in the long term. But in the short term, investors are confused about the contradicting news related to developments in the U.S.-China trade talks.

On Sunday, China’s Vice Minister of Commerce said that they would proceed with the October talks to resolve the trade war “with a calm and rational attitude.”

Reuters reported that the U.S. government was planning to delist Chinese corporations from American stock markets. But Treasury Department spokesperson Monica Crowley denied that the administration is considering such action. The rumor unexpectedly did not affect the stock markets. The equities market in Europe and Asia barely changed on Monday.

Meanwhile, investors and traders are still waiting for clues on the monetary policy of the U.S. Federal Reserve. Patrick Harker, President of the Philadelphia Federal Reserve Bank, said the Federal Reserve should be firm on its policy stance on interest rates. He also stated that he did not vote in favor of the rate cut implemented in the September meeting of the FOMC.

OCBC Bank economist Howie Lees thinks that the momentum of gold prices may be halted if the Federal Reserve releases a less-than-expected dovish policy statement.

The U.S. Commodity Futures Trading Commission (CFTC) reported that market speculators have elevated their bullish stance in COMEX gold for the week which ended on September 24.

In a related development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust dropped by 0.22% to 922.88 tons.

 

Source: PRECIOUS-Gold dips as U.S.-China trade woes support dollar, palladium hits record high