Gold Holds Steady After Monday’s Slide on Trade Deal Optimism
Gold prices are holding steady as traders await the Fed’s interest rate decision due on Wednesday, after witnessing a steep decline during the previous trading session on optimism over the partial trade deal between the US and China. At the time of writing, GOLD is trading at a little above $1,492.
The US central bank’s monetary policy meeting starts later today and markets are widely anticipating one more rate cut of 0.25%. Given that this rate cut appears to be almost completely priced in, it may not cause significant moves in gold prices when announced, unless there’s a variation from expectations.
On the trade war front, US President Donald Trump hinted that the “Phase 1” trade deal could be signed sooner than expected, although he didn’t provide any additional details. This statement supports official announcements from the US and China late last week that confirmed that they were nearly done finalizing some issues of this interim trade agreement.
Trump’s statements caused gold to slide lower as the trade deal would diminish its safe haven appeal and improve the market sentiment, causing traders to switch to riskier assets. Gold had previously surged above the $1,500 level when the trade war was escalating and markets worried that there was no scope for resolution anytime soon.
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