Gold to take cues from trade talks

Kolkata: The world is looking towards the ultimate outcome of the trade talks between Washington and Beijing. If there is a positive outcome of the trade talks, the yellow metal will come under pressure, as investors are most likely to rotate out into higher risk-seeking assets. However, if the outcome of the trade talks turns out to be negative, stocks would nosedive and investors will move into safe haven assets like gold, sector analysts pointed out.

The US and China kicked off a fresh round of trade talks last Thursday, to end the nearly year-old tariff war. Indications are that the US could lift some tariffs on China, while leaving others in place as part of an enforcement mechanism on a trade deal.

Gold prices steadied on Friday, but eventually headed for its worst month since August 2018, thanks mainly to stronger dollar and equities while palladium bounced back after three straight sessions of sharp selloffs. Spot gold was flat at $1,290.34 per ounce, after declining about 1.5 per cent in the previous session, the most in over seven months, analysts said, adding that the metal has lost about 1.7 per cent this month. But on a quarterly basis, gold is on path for a second straight rise, due to a dovish US Fed and concerns about a global economic slowdown.

Anuj Gupta, DVP–Commodities & Currencies Research, Angel Broking, said, “Gold prices are expected to trade higher on the back of lower US bond yield.

We have noticed that recently after the decision by the Fed on the US interest rates, concern towards the inflation and slow global growth, the gold prices are appreciating. The US data is also not up to the mark, which could support the gold prices… We are expecting gold prices may test the 32,500 to 32,600 levels on MCX, and on Comex, it may test $1,330 to $1,340 levels.”