The prices of gold were unchanged on Tuesday, as the markets wait for concrete details on phase one agreement between the U.S. and China.
U.S. gold futures were unchanged at $1,480.90 an ounce while spot prices were flat at $1,476.24 an ounce.
National Economic Council Director Larry Kudlow has declared that Phase One is “absolutely completed.” China reportedly agreed to increase its purchases of agricultural, energy and manufactured products from the U.S. in exchange for a reduction of tariffs on some Chinese imports. However, Chinese officials remain cautious and underscore the fact that the 17-month trade dispute has not yet been completely resolved.
The 86-page agreement is expected to be signed in early January after the translation process and some routine legal checks. But the markets want to know more information about the interim trade agreement. The lack of concrete details is preventing investors and trade from making firm investment decisions.
According to CMC Markets’ chief market strategist Michael McCarthy, the yellow metal is likely to trade in tight price ranges in the coming weeks because of two opposing factors counterbalancing each other. These are the improving trade situation and the weakening of the U.S. dollar. The greenback valuation remains flat today but declined against a basket of currencies in the two previous sessions. He added that there is also a risk that the market could be disappointed with the actual contents of the interim deal. This would be supportive of the pricing of the precious metal.
Meanwhile, the optimism on the U.S.-China interim agreement also lifted the Asian equities market to its highest level in over a year.
The protracted trade war has negatively affected the global economy and helped push up gold prices by 15% in 2019. This is because gold is generally considered a safe-haven asset favored by investors during times of economic and political uncertainty.