The prices of gold barely moved on Wednesday, November 13, 2019, after U.S. President Donald Trump’s speech at the Economic Club of New York did not provide anything new about the trade negotiations with China.
U.S. gold futures rose slightly to $1,459.10 an ounce while spot price stayed at $1,458.59 an ounce.
According to CMC Markets’ chief market strategist Michael McCarthy, there was a mixed reaction to Trump’s speech. His statement that the U.S. and China are close to finalizing phase one of the trade deal boosted risk-on market sentiment. But his threat of raising tariffs if an agreement is not signed provided support for gold. He added that the uncertainty in the trade talks have led some traders and investors to doubt whether the first phase of the deal could really be completed. Gold remains in a very narrow pricing range.
The positive outlook of the yellow metal was affected by the stronger dollar. The greenback is close to its highest valuation in a month which made gold more expensive for investors who are using other currencies.
But despite the downward trend in gold prices in the previous sessions, the mid- to long-term outlook of the precious metal remains bright.
The lack of new information and details from Trump’s speech weighed on Wall Street futures and the Asian stock market. A weakness of the equities market is positive for gold as it is considered a safe-haven asset during times of political and economic uncertainty.
Another positive for the bullion is the political turmoil in Hong Kong. The local police recently battled with protesters at several universities in the Chinese-ruled financial hub.
The ANZ bank also noted that the interest rate cut cycle, geopolitical risks and economic slowdown appears to be the reality. This environment will encourage investments in gold through 2020.
Meanwhile, Federal Reserve Chairman Jerome Powell is scheduled to testify before the U.S. Congress Joint Economic Committee on the outlook of the American economy later today.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the word SPDR Gold Trust dropped to its lowest level since September 20 which reflected the sentiment of the gold market.