Gold Weakens as US Equities Rally to Record Highs

The price of gold traded heavy in the early day on Tuesday, attributed to the strong performance of the stock markets.

CoT Report

Gold remains subdued on progress in Sino-U.S. trade talks; investors focus on central banks’ meetings

The prices of gold barely moved on Tuesday, October 29, 2019, because of the strong performance of the stock markets. U.S. gold futures dropped to $1,494.10 per ounce while spot prices were unchanged at $1,491.47.

The yellow metal was affected by positive developments in the U.S.-China trade negotiations which lifted the equities markets. But it was supported somewhat by investors’ anticipation of interest rate cuts in the upcoming meetings of major central banks.
U.S. President Donald Trump said that he might sign a substantial portion of the trade agreement with China earlier than expected. Moreover, the U.S. Trade Representative announced that the suspension of tariffs on Chinese products amounting to $34 billion might be extended after its expiration on December 28. These statements lifted the Asian stock markets to a three-month high and sent Wall Street to an all-time peak.

Despite this setback, analysts believe that the precious metal has still not lost its shine, though the market is very vulnerable right now.
CMC Markets analyst Margaret Yang Yan said that the U.S.-China trade negotiations are very unpredictable. It has already disappointed investors several times in the past and may do so again.

Another positive for gold is the Brexit uncertainty. The European Union (EU) has agreed to extend the Brexit deadline by up to three months but the British Parliament has yet to reach a consensus on the details of the withdrawal agreement.

In addition, investors are expecting the U.S. Federal Reserve to implement another interest rate cut at its meeting on Wednesday. If the traders and investors are right, this will be the third interest rate reduction this year.

The market is also keeping a close watch on the policy meetings of the central banks of Canada and Japan this week. The Bank of Japan is also expected to reduce short- to medium-term interest rates.
The demand for the precious metal increases as the interest rate decreases.

Source: PRECIOUS-Gold subdued as stocks soar on trade hopes; focus on Fed