On Tuesday, gold prices drop to their lowest in almost two weeks. And this is because of a stronger-than-expected China economic data whetted risk appetite and the imminent signing of a preliminary U.S.-China trade deal.
Spot gold price fell 0.4% to $1,541.81 an ounce. And earlier in the day, prices slipped to their lowest level since January 3 at $1,535.63. Then, U.S. gold futures fell by 0.5% to $1,542.40.
Aside from that, Asian shares rallied amid hints of goodwill between the top two largest economies as they get ready to sign a truce in their 18-month-long tariff dispute. This has upended the world economy.
Analyst Helen Lau stated, “It is mainly because of increased risk appetite and the U.S. removing China’s label as a currency manipulator that has greatly eased any economic tensions between these two countries.”
Then, a day before the Phase 1 deal signing, the U.S. Treasury on Monday dropped the description of China as a currency manipulator. And this suggests a further thawing of relations.
U.S. Trade Representative Robert Lightlizer explained that the Chinese translation of the deal is almost in its ending. It will be public before the signing ceremony on Wednesday.
Also, a Reuters report revealed that China has promised to purchase another $80 billion of manufactured goods. Also, it would buy more than $50 billion more in energy supplies from the United States for the next two years. But, worries remained about the trade war that has roiled global markets during the past one and a half years is not over.
Moreover, the data out of China displayed that exports boosted for the first time in five months in December. Also, imports exceeded expectations from the market.
Stronger-than-expected import and export numbers resulted in the stabilization of the Chinese economy. This is a very positive indication of global economic growth.
Gold prices rose 18$ last year; most of it was sue to the tariff dispute and its effect on the global economy.
Senior market analyst Jeffrey Halley noted, “With such strong global growth sentiment evident in markets around the world, and a lack of geopolitical tensions to give support, gold’s price erosion is likely to continue.”
Aside from that, spot gold might fall towards $1,524 an ounce, based on Reuters technical analyst Wang Tao.
Cottonseed Oil Cake Prices
Elsewhere, cottonseed oil cake prices on Monday dropped Rs 17 to Rs 2,133 per quintal in futures trade. At the same time, participants lessened their bets amid a weak trend in the spot market.
According to some market players, the sell-off by participants at the existing levels amid a subdued trend in the market has an impact on cottonseed oil cake prices.
Then, on the National Commodity and Derivatives Exchange, cottonseed oil cake delivery for January declined by Rs 17 or 0.79 percent. It is currently trading at Rs 2,133 per quintal with an open interest of 22,810 lots.
For February, delivery of cottonseed oil cake fell by Rs 19 or 0.87 percent to Rs 2,157 per quintal in 91,580 lots.