Gold rebounded this morning, regaining part of a nearly 2% decline in the previous session, as sentiment about a U.S.-China trade pact wobbled.
U.S. and Chinese officials are actively considering rolling back some tariffs to reach the partial trade deal that they’re currently negotiating, according to The Wall Street Journal. Meanwhile, China is reviewing U.S. locations where the leaders of the two countries would be willing to meet to sign the first phase of an accord, according to Bloomberg.
Bullion decreased 1.8% Tuesday. December futures settled at $1,483.70 an ounce on Comex, the lowest close since Oct. 15. Futures gained 2.8% in October. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.13% Tuesday to 915.85 metric tons from 914.67 tons Monday, Reuters reported. The December contract is currently at $1,488.80
Yesterday’s strong equities, which make precious metals less attractive as an alternate investment, led to a drop on gold. The Standard & Poor’s 500 Index slipped 0.1% Tuesday but remained near Monday’s record high. The yellow metal’s luster also dimmed after U.S. ISM nonmanufacturing data for October came in better than expected, easing some fears of recession.
Investors are keeping a close eye on economic news for indications on whether the Federal Reserve will cut interest rates for a fourth consecutive time in December. The CME FedWatch Tool showed just a 8.1% probability of another cut at the Federal Open Market Committee’s next meeting Dec. 11, while 92.9% predicted no change early Wednesday. The figures have shifted from a week ago, when 80.5% predicted no change, 17.2% anticipated another cut and 2.2% forecast an increase.
Regional Federal Reserve presidents including Charles Evans, John Williams and Patrick Harker are set to speak at events Wednesday. And the Bank of England is scheduled to announce a monetary decision Thursday.
Global gold demand grew 3% year on year in the third quarter, according to the World Gold Council’s latest Gold Demand Trends report Tuesday. A surge in ETF inflows outweighed demand in other parts of the market. Central bank demand remained “healthy,” though lower than the record levels seen in the third quarter of 2018. High gold prices and fears about the global economy hampered jewelry demand, the report showed.
Investors continue to watch the latest efforts to impeach U.S. President Donald Trump and the U.K.’s moves toward Brexit. Gordon Sondland, the U.S. ambassador to the European Union, reversed earlier testimony Tuesday by acknowledging he told one of the advisers to the Ukrainian president that resumption of U.S. aid was tied to an anti-corruption pledge sought by Trump, The Washington Post reported. Meanwhile the U.K. headed toward a Dec. 12 election.
Silver tumbled 2.8% Tuesday, outpacing gold’s decline. The most-active December contract settled at $17.57 an ounce on Comex. It gained 6.3% in October. Spot platinum and spot palladium both declined Tuesday.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.