The prices of gold rose slightly on Monday, October 28, 2019, as investors and traders anticipate an interest rate cut by the U.S. Federal Reserve this week. U.S. gold futures gained 0.3% to $1,509.60 an ounce and spot prices increased by 0.2% to $1,596.95 an ounce.
There was very limited movement in the price of the yellow metal because the market is still waiting for the interest rate decision of the U.S. Federal Reserve. In addition, investors’ interest in safe-haven assets was checked by the progress in the Sino-U.S. trade negotiation.
The U.S. central bank will meet on October 29 and 30. According to data from CME FedWatch tool, investors see a 90% chance for a quarter-point interest rate cut.
National Australia Bank economist John Sharma said that if the Federal Reserve decides to reduce interest rate for THE third time this year, gold’s gains will be limited since the effect of the trade war is no longer as intense as during the previous months. The effect of the developments in the Sino-U.S. trade talks will also be only temporary because the situation is too complicated to be solved quickly, he added.
Last week, U.S. President Donald Trump said that China wants to finalize a trade deal very badly and that the U.S. is doing well in the negotiations. His statement sent the Asian stock market to its three-month high and encouraged interest in riskier assets.
The strengthening of the U.S. dollar also weighed on the prices of the precious metal. The greenback gained almost 0.6% last week and slightly rose again today against several major currencies. A strong dollar raises the prices of gold for investors using other currencies.
In a related development, the European Union has granted British Prime Ministers Boris Johnson’s request for an extension on the Brexit deadline. No date has been set yet but the extension will give the British Parliament time to decide on Johnson’s call for an election in December.