Gold steady below $1500's as positive case from geopolitics firm-up

  • US data disappoints and USD slides, while gold loses traction on geopolitical news.
  • A 50% mean reversion of the late June swing lows to recent highs around $1460/70 could be on the cards.

Gold is currently supported in the $1,490-$1,496 tight range in Asia, despite an informal confirmation from Trump, speaking at a campaign rally, boasting how well trade talks are going with China. Risk has rallied yet Gold is at a standstill ahead of highly anticipated high-level trade talks later today in Washington when Trump and Vice Premier Lui finally meet. 

US data

The US September headline CPI was flat month on month with ex-food and energy +0.1% for the same time frame and below the estimates of +0.1% and +0.2% respectively. Annual CPI remained at 1.7%, below the expected 1.8%, while ex-food and energy remaining at +2.4% (as expected).

Focus on geopolitics

While the US Consumer Price Index disappointed overnight, the focus was elsewhere and staying with geopolitical events. The US Dollar was somewhat lower overnight but Gold was on the backfoot following news that trade talks had started off well and in earnest.

Trump announced that he will meet with Chinese Vice Premier Lui He today:

“Big day of negotiations with China. They want to make a deal, but do I? I will meet with the Vice Premier tomorrow at The White House,” said Trump.

Also, in a Bloomberg news it was reported that the White House could put in place a currency pact and suspend tariff increases that are set to take effect Oct. 15. Coupled with the positive turn-up in trade talks, Brexit headlines were equally positive. "There is undoubtedly an increased willingness to get a deal done. But a lot will depend on the details which are not available. The EU’s Chief Negotiator Barnier will reportedly sit down with UK officials on Friday (today) to see if a deal is possible - and this will be a key ‘make-or-break’ moment," analysts at ING Bank argued. 

Gold levels

Technically, a 50% mean reversion of the late June swing lows to recent highs around 1460/70 will be on the cards if geopolitics maintain positive traction. However, on the upside, a foothold above the 1500 level will open prospects for the 1520 level again ahead of a 1535 resistance target. 

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