Unclear details from the latest trade agreement between the United States and China has prevented investors in the global gold markets from going all out for the precious metal after results of Tuesday’s trading sessions show an unimpressive performance of the commodity at the close of trading.
The weak dollar and uncertainties on the longevity of the trade agreement were major contributors that led to the recent volatility of the price of the commodity in the international market.
The U.S. gold futures were flat at $1,480.80 per ounce while spot gold slightly appreciated at $1,476.43 per ounce.
Palladium gained 0.5 per cent higher at $1,987.59 per ounce at the early trading hours after closing at an all-time high of $1,998.43 per ounce.
“The trade situation is improving but the weaker dollar is counterbalancing that. So, we’re seeing tight ranges for gold prices with these two factors running in opposite directions,” said Michael McCarthy, a market strategist.
Therefore, uncertainties on the trade deal will be a boost that could push prices of gold higher in the coming days.
“There is a real risk that when it comes to the actual deal as contained on the document, we could see some market disappointment and that of course would be supportive for gold,” he added.
The precious metal lost its value in the hands of foreign investors who are trading on other currencies when the dollar index was changed as a result of losses that were posted.
Moreover, despite the U.S. announcing that a deal with the Chinese has been reached the Asian largest economy are exercising some level of cautions on the outcome of the agreement saying that the dispute has not been satisfactorily reached.
The precious metal which is considered a safe haven during political and economic crisis has significantly surged by 15 percent this year and palladium used in auto manufacturing plants for the production of catalytic converters in vehicles also gained a little above 57 percent this year.
A market firm, MKS PAMP affirms that palladium’s price increase was as a result of uncertainties by investors on a decrease in supply
It said, “Supply concerns have kept the metal buoyant, and underlying demand appears to be in good shape still on pull-backs. We look set for an imminent test above $2,000, but we feel there will be some good supply above there from the spec community,” they added, referring to speculators.
Elsewhere, silver fell by 0.2 percent at $17 per ounce, while platinum gained 0.3 percent to $932.3 per ounce.
Frontpage August 26, 2019