The prices of gold fell slightly on Wednesday, November 27, 2019, after President Donald Trump said the U.S. is close to finalizing an interim trade agreement with China. His statement switched the markets into a risk-on mode.
U.S. gold futures dropped by 0.1% to $1,459.30 an ounce. Spot prices also dropped by 0.1% to $1,459.20 after hitting its two-week low during the previous trading session.
Trump announced yesterday that the negotiating parties are in the final phase of completing a deal that would resolve the 16-month trade dispute. The top negotiators for both sides have agreed to maintain communication to iron out the remaining issues in the interim agreement.
This positive development in the trade talks raised the valuation of the dollar and lifted the Asian equities markets. It also gave the U.S. stock markets new record closing highs.
But DailyFx senior currency strategist Ilya Spivak does not expect a lasting effect from the trade news. He said the telephone discussion between top American and Chinese negotiators boosted market optimism but its effects will only be temporary and short-lived unless an actual agreement is signed.
Benjamin Lu, a Phillip Futures analyst, noted that the precious metal has shown some resiliency but it continues to be challenged by the progress in the U.S.-China trade talks and risk appetites in the global market.
Meanwhile, some investors are worried that the measures passed by the U.S. Senate in support of Hong Kong protesters could negatively affect the trade negotiations.
On the economic front, consumer confidence in the U.S. dropped for the fourth consecutive month in November. In China, corporate profits in October plummeted to its lowest level in eight months. Spivak undermined the effect of soft economic data on gold prices since the U.S. Federal Reserve has already indicated that it will no longer cut interest rates.
Today, investors and traders are waiting for the release of economic data that could influence the market. These include the U.S. GDP growth and the Federal Reserve’s Beige Book or the Summary of Commentary on Current Economic Conditions by Federal Reserve District.