The prices of gold declined slightly on Monday, November 25, 2019, after it was reported that the U.S. and China are willing to sign phase one of their trade agreement before the end of the year.
U.S. gold futures dropped by 0.2% to $1,460.80 an ounce. Spot prices fell to its one-week low early in the trading session before settling at $1,460.85 an ounce, which is 0.1% lower compared to the previous session.
The positive headlines about the Sino-U.S. trade negotiations helped the Asian stock markets and the dollar recover from their previous weak performance. The greenback was also lifted by the strong U.S. manufacturing output and better-than-expected services activity in November. The strengthening of the dollar made the non-yielding yellow metal more expensive for investors using other currencies.
The downward trend of the precious metal was capped by investors’ concerns about the second phase of the trade deal which both American and Chinese officials say is ambitious and unlikely.
According to CMC Markets analyst Margaret Yang Yan, the optimism about the trade agreement boosted the global equities market which led investors to riskier assets. She also mentioned the consensus that the projected global economic slowdown will materialize in the first quarter of 2020 given the current strength of the U.S. economy.
Stephen Innes, a market strategist with AxiTrader, added that gold has been in a prolonged consolidation period at the bottom of its recent price range and is waiting for a major catalyst to influence price movement. He believes that the factors most likely to have a significant impact on gold are the valuation of the dollar, interest rates in the U.S. and the monetary policy of the U.S. Federal Reserve.
Meanwhile, data showed that traders and investors have raised their bullish stance in COMEX gold contracts for the week which ended on November 19.
On the technical front, Reuters’ technical analyst Wang Tao predicts that spot prices may approach a support price level of $1,455 an ounce. A move away from this level may point spot gold down to $1,440 an ounce.