Gold Prices Hold Near 4-Month Highs Despite US-China Trade Hopes

New York (Jan 2)  Gold prices edged up on Thursday, albeit in markets clearly still thinned by the holiday calendar, as a bit of Dollar weakness supported the oldest haven asset of all.

The greenback in turn slid as 2019 bowed out, with some investors clearly prepared to bet that the old year’s theme of US economic outperformance won’t be as pronounced in 2020, especially if trade tensions between Washington and Beijing ebb. While an interim phase one trade deal is set to be signed on January 15, a more substantive agreement remains very much in the balance but, for now, markets seem prepared to give trade negotiators the benefit of any doubt.

Still, for all the notable risk appetite revival evident in markets from equity to commodity currencies, gold prices remain around four-month highs after soaring through December. This suggests perhaps a little more uncertainty than beacons such as record Wall Street highs might suggest. Worries persist about underlying Chinese growth, the health of the Eurozone and the possibility of revived military tensions in the Middle East as the US and Iranian backed militia square off in Syria and Iraq. Chinese handling of pro-democracy protests in Hong Kong also looms over the market.

It will therefore be fascinating to see how much gold retrace its gains once details of the first trade deal are known.

For now, spot prices remain apparently capped by a band of resistance derived from the highs of late September.

DailyFX