Gold prices finished yesterday’s trading flat as the market’s excitement over the US-China trade deal and Brexit waned. After XAUUSD opened at $1,475.25, it traded sideways and finished the day with measly gains at $1,475.67.
US-China Trade Deal Not as Good as It Seems?
On Friday, risk appetite surged on news that the US would rollback existing tariffs and cancel additional levies on Chinese goods. China has also reportedly agreed to buying up to 200 billion USD worth of US goods until 2021. However, over the weekend, it seemed that market participants grew unimpressed of the deal which helped prop up gold prices. For one, there’s skepticism that phase one of the trade deal can easily be revoked. Second, some market participants questioned China’s commitment to its purchases. This is because the country has not issued a statement regarding the deal.
Brexit Concerns Resurface
Meanwhile, across the Atlantic, concerns about a no-deal Brexit surfaced. This came after reports were released regarding Prime Minister Boris Johnson’s plan to make it illegal to extend the deadline for the transition phase. According to analysts, policymakers may need more time beyond December 31, 2020 to discuss extensive trade deals. The lack of leeway may lead to the UK getting a no-deal Brexit.
US PMI Reports Meet Expectations
During the New York session, XAUUSD fell following the US PMI reports for November. According to Markit, the manufacturing sector continued to grow during the month. The reading was above the 50.0 baseline number which indicates expansion at 52.5. It narrowly missed the forecast at 52.6. Meanwhile, the services PMI topped expectations at 52.2 with the consensus at 52.0.
On the hourly chart, we can see that gold prices seem to be stuck in a consolidation. A bullish close above yesterday’s high at $1,479.66 could mean that the commodity may soon find its way to last week’s high at $1,486.43. On the other hand, a bearish close below yesterday’s low could indicate that XAUUSD may soon drop to support around the $1,466.00 handle. This level seems to coincide nicely with the higher lows from December 2, December 9, December 10, and December 13.