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Lower Equities, Dollar and Optimism on Trade War Resolution Yet Gold Closes Lower

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An interesting mix of fundamental news which could be interpreted as bullish for gold and silver, did little to move the precious metals higher today. They did however move both gold and silver off of the intraday lows this morning. As of 4:32 PM EST gold futures basis the February contract is currently trading down $4.10 (- 0.28%) at $1468.60. Silver is also trading lower on the day currently down almost $0.12 and fixed at $16.85 an ounce.

These declines come in light of a moderate selloff in U.S. equities. The Dow Jones industrial average lost almost a full percentage point today (-0.96%), or a total of 268.37 points and closed at 27,783.04. The S&P 500 lost 27.11 points (-0.86%) and is currently trading at 3113.87. The NASDAQ composite had the largest percentage drawdown today, giving up 97.48 points (-1.12%) and is currently fixed at 8567.99. Although most stocks declined today it did not spark any rally in the safe haven asset class. The decline in equities however did move gold off of its lows this morning which came in at $1458.80.

China’s state-run Global Times reported that the United States must rollback tariffs as an integral part of any “phase one” agreement that they would sign. The statement along with the fact that China is infuriated by the signing of a bill supporting Hong Kong’s pro-democracy demonstrators last week has moved the timetable to a completed agreement to at least late December.

According to Axios, “A source close to Trump's negotiating team told me the China deal was now "stalled because of Hong Kong legislation" and that time is needed "to allow Xi's domestic politics to calm." The "Phase One" deal with China would probably happen "year-end at the earliest," and Trump is expected to hold off on his planned December tariffs to keep the deal alive.”

Considering that a week ago U.S. sources close to the China talks said that they were very close to a “phase one” deal, the optimistic tone that spurred higher equity prices last week has changed to guarded pessimism.

However, there was an uptick in China’s official manufacturing PMI, which move back into expansion, rising to 50.2 in November from 49.3, this according to MarketWatch. Interestingly this data was able to contain any solid upside move in gold pricing today.

Lastly traders will look to the U.S. Labor Department’s employment numbers which will be released on Friday.

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Wishing you as always, good trading,

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