The markets wait for more clarity on the signing of the first phase of the U.S.-China trade agreement which will tend to weigh on gold prices. At the same time, the yellow metal is supported by lingering concerns about the global economy.
U.S. gold futures gained by 0.2% to $1,486.90 while spot prices were up by 0.1% to $1,485.25 an ounce just after the European open.
According to Kedia Advisory director Ajay Kedia, the recent decline in gold prices in previous sessions could just be technical retracement since there are still fears of an economic slowdown. The economic data released recently by the U.S., the European Union and China are not very strong.
He added that trade talks are very unpredictable and this is particularly true for the U.S.-China trade negotiations. For several times in the past, the two parties have started talks only to stop half-way without accomplishing anything.
The signing of the first phase of the agreement is expected this month but the venue for the signing has not yet been set.
The news about the possible signing of an agreement in November encouraged risk on sentiments in the financial markets which negatively affected gold prices in the two previous sessions. The release of better-than-expected manufacturing data in the U.S. for October also weighed on the precious metal since it alleviated fears of an economic slowdown.
However, the lack of clarity on the progress of the negotiations pushed the Asian stock markets down for the first time in four days. Some investors lowered their optimism that the two largest economies in the world would finally resolve their damaging trade dispute. Another positive development for gold is the slight decline in the valuation of the dollar against a basket of currencies.
Jeffrey Halley, an OANDA analyst, expects long position liquidation if gold prices finally go lower than $1,480 an ounce.
Meanwhile, the holdings of the largest gold-backed exchange-traded fund SPDR Gold Trust increased by 0.13% to 915.85 tons yesterday.