The prices of gold declined close to its two-week low on Tuesday as the forthcoming signing of the interim U.S.-China trade deal and better-than-expected Chinese economic data raised investors’ risk appetite.
U.S. gold futures slipped by 0.7% to $1,539.70 an ounce. Spot prices hit its lowest pricing since January 3 earlier in the trading session before finally settling down at $1,538.84 an ounce as of 0459 GMT.
Yesterday, U.S. Trade Representative Robert Lighthizer announced that the Chinese translation of the Phase One agreement is almost complete and will be released to the public before the signing tomorrow. Considered as another indication of the improving relations between the two largest economies, the U.S. Treasury Department has officially removed the designation of China as a currency manipulator.
The positive news about the Phase One agreement triggered a recovery of the Asian stock markets.
However, there are still concerns that the interim deal does not represent a complete resolution of the 18-month-long trade war between the U.S. and China. The tariff dispute has significantly affected the global economy and raised gold prices by a total of 18% in 2019.
Another factor putting pressure on the precious metal is China’s release of December data which shows exports growth for the first time in five months and better-than-expected imports growth.
According to Argonaut Securities analyst Helen Lau, the strong economic data from China and the removal of its label as a currency manipulator have increased investors’ risk appetite which in turn reduced the demand for the yellow metal.
OANDA senior market analyst Jeffrey Halley added that given the positive sentiments in the global markets and the lack of geopolitical risks, a downward trend in gold prices can be expected to continue.
Meanwhile, it was revealed that while officials agree not to cut interest rates anytime soon, they have differences in assessing whether a financial risk warrants a rate increase.
On the technical front, Reuters’ technical analyst Wang Tao expects spot gold prices to drop top $1,524 an ounce.