The prices of gold barely changed on Tuesday, December 10, 2019, as traders and investors wait for two major events this week that could significantly affect the markets. These are the rate-setting meeting of the U.S. Federal Reserve on December 10-12 and the U.S. implementation of new tariffs on Chinese products on December 15.
U.S. gold futures increased by 0.1% to $1,465.60 while spot gold prices dropped by 0.1% to $1,461.10 an ounce.
According to CMC Markets analyst Margaret Yang Yan, both events are price catalysts for gold. If the U.S. central bank decides not to cut interest rates then the price of the yellow could go down. But if China and the U.S. fail to reach any agreement and tariffs are imposed on Chinese goods then investors are likely to return to the safe-haven bullion.
Both the Americans and the Chinese have already adopted a more diplomatic stand on the issues between them. China has reiterated its desire to finalize a trade agreement at the soonest possible time. On the other hand, President Donald Trump said he is working out an agreement with China before the implementation of tariffs on Chinese goods worth about $156 billion.
This development is not good for the precious metal, according to ED&F Man Capital Markets analyst Edward Meir. He said that the possibility of a U.S.-China deal could cause gold to trade in the lower pricing range for the remaining weeks of 2019. Despite this, the bullion is still likely to have its best year in almost a decade.
On the Fed meeting, policymakers are expected to maintain interest rates in the 1.50% to 1.75% range. The central bank has already reduced interest rates thrice and emphasized no further cuts for the rest of the year unless a major economic slowdown requires them to take action.
Meanwhile, Reuters’ technical analyst Wang Tao expects the precious metal to test a support pricing level at $1,455 an ounce. He believes that a break below this level could push gold further down to $1,440.