Gold stops two-day winning streak on the Fed day, trade/political jitters continue
|- Gold fails to benefit from UK election polls and doubts over the US-China trade deal.
- Traders turn cautious ahead of the FOMC.
- US CPI adds burden to market watchers, British election, trade headlines will dominate the Fed.
Gold prices register a mild loss of -0.05% while taking rounds to $1,463 during early Wednesday. The yellow metal seems to have lacked buying ahead of the key monetary policy meeting by the US Federal Reserve (Fed).
The Bullion struggles to justify worrisome polls concerning the United Kingdom’s (UK) election on December 12. The YouGov MRP poll now shows a close call of a hung parliament versus a clear majority for the ruling Conservatives Party during its previous release on November 27.
Also raising doubts on the metal’s pullback is looming uncertainty over the phase-one deal between the United States (US) and China. The recent comments from White House Adviser Peter Navarro mention that it's up to the Chinese as to whether to get a deal. The same follows White House Economic Adviser Larry Kudlow’s comments that the tariffs are still on the table.
Furthermore, the Asian Development Bank (ADB) recently cuts its growth view for China and other developing economies of Asia amid trade war fears. Though, Moody’s analysts say Sovereign credit quality in Australia, New Zealand, Korea, Singapore and Japan will remain strong in 2020.
The clues for the safe-haven’s recent declines can be traced to the US dollar’s (USD) recovery. The greenback seems to prepare for the final Federal Open Market Committee (FOMC) meeting of the year.
Even so, the risk tone stays sluggish with the US 10-year treasury yields being mostly unchanged near 1.83% whereas S&P 500 dropping 0.14% to 3,131 by the press time.
The market will now gear up for the key US Fed meeting with no expectations of another change announcement. However, economic forecasts and Chairman Jerome Powell’s press conference will be important to watch.
Technical Analysis
A gradual recovery between the four-week-old rising trend line and 100-day Simple Moving Average (SMA), $1,456 and $1,489 respectively, keeps the buyers hopeful.
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