Spot gold was down 0.1% at $1,499.89 per ounce, as of 0716 GMT.
U.S. gold futures were down 0.2% at $1,510.80 an ounce.
· “Easing in trade tensions, geopolitical risks have provided some sort of hope in the markets which boosted equities, because of this there is a brief pullback in gold prices,” said John Sharma, an economist with National Australia Bank.
“However, the trade dispute is still not resolved. Geopolitical risks in Hong Kong, trends in global growth and we are also expecting at least one more cut from the Federal Reserve. All these factors are supportive for gold,” Sharma added.
· U.S. President Donald Trump on Tuesday backed off his Sept. 1 deadline for 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods, in the hopes of blunting the impact on U.S. holiday sales.
· The reprieve in the trade dispute between the world’s biggest economies provided relief for financial markets gripped by political and economic turmoil, as Asian shares joined a global equities rally on Wednesday.
· “Financial markets are starved for a bit of good news. China said it would hold trade talks by phone in two weeks, and the U.S. saying it will delay some of the tariffs have driven a wave of profit-taking across safe-haven assets,” Stephen Innes, managing partner, VM Markets wrote in a note.
· Meanwhile, China’s closely watched industrial output rose in July at the slowest pace in more than 17 years, official data showed on Wednesday, in the latest sign of faltering demand as the United States ramps up trade pressure.
· Market focus shifts to the U.S. Federal Reserve’s annual symposium next week for clues on the future trajectory of interest rates. Traders see a 86.2% chance of a 25 basis-point rate cut by the U.S. central bank this September.
Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
· The dollar index was relatively unchanged against a basket of major currencies on Wednesday, after rising 0.4% overnight.
· Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.3% to 836.66 tonnes on Tuesday from Monday.
· Spot gold may retest a support at $1,480, following its failure to break a resistance at $1,524 per ounce, said Reuters technical analyst Wang Tao.
· Gold: Flat lined near $1,500, Tuesday's spinning top indicates bullish exhaustion
Gold is currently trading largely unchanged on the day at $1,500 and could drop to the 10-day moving average support at $1,484 during the day, as signs of bull market exhaustion have emerged on the daily chart.
Further, the 14-day relative strength index is reporting overbought conditions and the moving average convergence divergence histogram is producing lower highs above the zero line, a sign the bullish momentum is weakening.
All-in-all, the stage looks set for a corrective pullback. A short-term bearish reversal would be confirmed if prices close today below the spinning top's low of $1,481. On the other hand, a close above the spinning top's high of $1,535 would revive the bullish outlook.
· Bill Baruch, president of Blue Line Futures, said that while the inversion will not directly push gold prices higher, it continues to highlight the positive environment for the yellow metal.
“The flattening yield curve is what has been driving gold prices higher. It has really lifted the ceiling for gold,” he said. “The yield curve is moving because there are major fears of a recession.
Baruch added that that although gold prices appear to be facing some strong resistance he remains bullish on the precious metal as prices have managed to hold critical initial support above $1,480 an ounce.
· Silver eased 0.1% to $16.95 per ounce, after hitting a more than one-and-a-half-year high in the previous session.
Platinum slipped 0.5% to $847.92 an ounce and palladium dipped 0.8% to $1,444.16 an ounce.
Reference: Reuters, FX Street, Kitco
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