The prices of gold slipped to a two-week low today, November 26, 2019, because of optimism that the U.S. and China may soon reach an interim trade agreement. This development weakened the demand for safe-haven investments.
U.S. gold futures dropped by 0.2% to $1,453.80 an ounce while spot prices fell by 0.1% to $1,454.80 an ounce.
It was reported that U.S. Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer Chinese Vice Premier Liu He held a telephone discussion to address their main concerns about phase one of their trade agreement and resolve related problems. These top negotiators also agreed to maintain their communication regarding a possible interim trade deal.
This positive news on U.S.-China trade negotiations boosted the Asian equities market and lifted the U.S. dollar close to a two-week high. Another positive development is China’s announcement on Sunday that it would improve intellectual property protection. Investors and traders consider this as another sign of trade dispute de-escalation.
According to Benjamin Lu, an analyst with Phillip Futures, the progress in the trade negotiations and the expected strong U.S. economic data are improving market optimism and weighs on the precious metal. However, he believes the bullion still finds support in the fact that no substantial detail has been released regarding the progress in the first phase of the negotiations. Moreover, the global economy is still experiencing slow growth which encourages investments in safe-haven assets.
Meanwhile, U.S. Federal Reserve Chairman Jerome Powell said that central bank officials have a favorable opinion on the outlook of the American economy. But they are prepared to “respond accordingly” if a reassessment of their outlook is warranted by poor economic data, he added. Trade uncertainty and weak global economic growth have been inhibiting the growth of the U.S. economy.
In a related development, traders and investors are monitoring the release of U.S. data on consumer confidence later today.