The prices of gold barely changed on Wednesday, December 18, 2019, as the markets wait for concrete details about the interim phase one trade deal struck by the U.S. and China.
U.S. gold futures were almost unchanged at $1,480.80 an ounce while spot prices remained at $1,476.55 an ounce as of 0354 GMT.
Yesterday, U.S. Trade Representative Robert Lighthizer did announce that they would provide details on the part of the deal where China will increase its purchases of American agricultural, manufactured and energy products. But he did not mention when those details will be made public.
According to Warren Patterson, ING’s Head of Commodities Strategy, gold prices have been capped by the positive macroeconomic environment resulting from the trade deal. However, the precious metal is still somewhat supported by the element of uncertainty from the lack of any significant details about the trade agreement.
Aside from the trade deal, the strong economic data from the U.S. also weigh on the precious metal. Manufacturing production and new housing starts in November rebounded more than expected. The number of house construction permits soared to a more than 12-year high because of lower mortgage rates.
The positive U.S. economic data, in turn, boosted the stock markets and the dollar. The Asian stock markets rose close to an 18-month high after rallying for five consecutive trading sessions. While the greenback climbed against a basket of major currencies and reached close to its one-week peak.
Meanwhile, the Federal Open Market Committee (FOMC) has maintained its stand not to touch the interest rates unless absolutely necessary to sustain economic growth. Stephen Innes, a market strategist with AxiTrader, noted that while the FOMC’s stance will not push the gold prices up, it does provide an element of support for the precious metal.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Holdings dropped by 0.6% yesterday which reflects investors’ interest in the yellow metal.