Last updated on October 20th, 2019 at 11:08 am
The price of gold remain almost unchanged on Tuesday. The yellow metal hit its two-week peak during the previous trading session but its momentum was dampened by positive developments related to the U.S.-China trade negotiations.
Gold futures dropped slightly to $1,527.10 an ounce while spot prices stayed flat at $1,521,24 an ounce.
According to CMC Markets chief market strategist Michael McCarthy, gold prices were negatively affected after both the U.S. and China have indicated the possibility of finally reaching an agreement.
The Sino-U.S. trade war has already driven up the prices of the safe-haven metal by around 18% this year.
Meanwhile, a survey revealed a slowdown in business growth in the euro area in September. This is attributed to the unexpected sudden deterioration of the industrial recession in Germany.
Stephen Innes, a strategist with AxiTrader, says that gold will benefit if the macroeconomic slowdown continues. The market may set pricing based on anticipated accommodative policies of central banks and this will lower bond yields. In turn, this will reduce the cost of owning gold.
The situation in the Middle East has deteriorated since the attack on Saudi Arabia’s major oil refineries in early September which reduced the kingdom’s crude oil production by half. The U.S. Department of Defense has ordered the deployment of additional troops in the Gulf region to support Saudi in defending against possible future attacks. In addition, France, Germany and Great Britain backed the U.S. in blaming Iran for the attacks.
On the technical aspect of trading, Reuters’ technical analyst Wang Tao believes that the current neutral price range for gold is $1,497-$1,524 and a move away from this level could point to a new pricing direction.
In a related to development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust grew by 1.61% to a total of 908.52 tons. This is the highest level since November 2016 and indicates a market sentiment that favors the precious metal.