Spot gold edged down 0.1% to $1,490.70 per ounce as of 0711 GMT. U.S. gold futures were 0.2% lower at $1,494.80 per ounce.
· “Markets enjoyed a good risk-on rally, but on Monday news came out saying that China required more negotiation and talks before they find any deal, which is very disappointing,” said Margaret Yang Yan, a market analyst at CMC Markets.
· A Bloomberg report on Monday, citing sources, said China wants more talks as soon as the end of October to hammer out the details of U.S. President Donald Trump’s phase 1 deal before Chinese President Xi Jinping agrees to sign it.
Sombre data from China reinforced the case for Beijing to unveil further stimulus as manufacturing cools on weak demand and U.S. trade pressures. China’s factory gate prices declined at the fastest pace in more than three years in September.
Late on Friday, the United States outlined the first phase of a trade deal and suspended this week’s scheduled tariff hikes on Chinese goods, but existing tariffs remained in place and officials on both sides said much more work was needed before an accord could be agreed.
· Asian stocks and Wall Street futures inched higher as some investors held out hope that Britain still had a chance to avoid a messy exit from the European Union.
· Officials from Britain and the EU will meet at a make-or-break summit on Thursday and Friday that will determine whether Britain is headed for a so-called no-deal Brexit.
· “The Brexit narrative seems to be playing as a basic risk on/off catalyst, with echoes into bond yields driving near-term gold swings,” said Ilya Spivak, a senior currency strategist at DailyFx.
“The markets remain priced for a far more dovish Fed outlook than the central bank has signed up for.”
· The U.S. Federal Reserve will meet later in the month and the markets are on the lookout for signs the central bank will cut interest rates, earlier than the expected December cut.
· Gold technical analysis: Bears look for a break below the trendline support
Meanwhile, Main Street investors remain strongly bullish on gold in the short term.
Kevin Grady, president of Phoenix Futures and Options, said that while $17 trillion in negative interest rates and renewed economic uncertainty in Europe will keep a floor under gold, he sees strong equilibrium in the market.
“Any move to $1,520 is sharply sold. But any move towards $1,480 is quickly bought so maybe we have found gold’s fair value for now,” he said.
· Gold prices should be targeting as high as $1,650 to $1,700 an ounce by the first quarter of next year, but fundamental events need to be pushing the yellow in the right direction, this according to Gary Wagner, editor of thegoldforecast.com.
“A lot of it has to do with fundamental events and the biggest one of course is whether or not they resolved the trade war, but if they continue to have the issues they’ve been having, I see gold moving substantially higher,” Wagner told Kitco News.
Wagner noted that the trade war has caused a cascade of new monetary policies, which may involve quantitative easing, but the Fed is so far undecided as to how much liquidity to introduce into the monetary system.
· Gold prices should edge slightly higher and average the end of the year at $1,510 an ounce on the back of weakness in U.S. yields or the resumption of quantitative easing (QE) from the Federal Reserve, this according to a report published by Standard Chartered Bank.
The report indicated that while physical demand for gold may be weak, renewed investor interest should keep prices afloat.
“Investor positioning in gold is elevated; thus, a new catalyst will be required to drive additional interest. ETP [Exchange traded product] holdings have reached a new high, and short interest in GLD fell to a July 2017 low,” the report said.
“The market started pricing in a higher probability of a 25bps rate cut at the October FOMC meeting, rising from less than 40% at the start of last week to above 60% after the weaker-than-expected ISM data. This probability has now risen to above 80%,” the report said.
Additionally, “heightened political risks around Brexit and trade tensions continue to stimulate tactical interest,” according to the bank.
· Palladium jumped to a peak of $1,726.74 an ounce. Concerns that supply of the metal used in car exhaust systems could run out has helped lift prices more than 36% this year.
Silver dropped 0.2% to $17.61 per ounce and platinum declined 0.1% to $891.77.
Reference: Reuters, FX Street
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