Gold prices had a volatile trading day yesterday on news surrounding the US-China trade negotiations. XAUUSD initially rallied to an intraday high of $1,486.45. However, gold bulls could not sustain the move and the commodity dropped to an intraday low of $1,463.64. By the New York session close, gold prices had settled at $1,469.21. This translated to a five dollars and sixteen cent-loss for the commodity.
Negative US Data Boost Gold
The precious metal rallied during the start of the New York session as economic data from the US failed to impress market participants. Producer prices index reports for November fell short of forecasts. The headline figure came in flat at 0.0% which missed the 0.2% uptick that was forecasted. Meanwhile, the core reading showed a decline of 0.2% in prices. Market consensus was for a 0.2% growth rate to follow the 0.3% reading for October.
Trump Hints a Trade Deal is Imminent
However, gold prices soon slid following a tweet from US President Donald Trump. According to him, the US and China both want a trade deal badly. There were also reports which suggest that both sides may be coming to terms with each other. The Wall Street Journal said that existing tariffs could be rolled back and that additional levies which are set to be implemented this Sunday could be cancelled. China has also reportedly agreed to purchase 50 billion dollars-worth of agricultural goods from the US in 2020. We have, however, yet to hear an official statement from the White House or Beijing to confirm these reports.
US Retail Sales Due Today
What is confirmed for today though, is that retail sales reports from the US for November are on deck. It is expected that overall consumer spending picked up by 0.5% during the month. On the other hand, the core reading which does not include volatile items, is seen to post a 0.4% growth rate.
On the 4-hour chart, we can see that XAUUSD has been trending higher. This is evidenced by the rising channel that has materialized when you connect the highs and lows from November 8 to today.
Should risk aversion dominate today’s trading, buyers could push gold prices higher to the top of the channel. Resistance can be eyed at yesterday’s highs around $1,486.48 which also coincides with the commodity’s previous lows. If there is enough buying pressure to push past this level, XAUUSD could be on its way to its October 31 highs around $1,514.64.
On the other hand, positive developments on the US-China trade negotiations could push XAUUSD to the bottom of the channel which is around $1,462.30. If support at that price does not hold, XAUUSD could fall to November 13 lows at $1,445.77.