Better Risk Appetite Hits Gold

Metal knocked from four-week high

The feel good factor from US President Trump’s comments that the Phase 1 deal negotiations with China are ahead of schedule has knocked gold back from near four-week highs. Trump expects the Phase 1 deal to be signed at the APEC summit in Chile next month and this helped power the SPX500 index to record levels yesterday.

Better risk appetite means a lesser demand for safe haven assets, so gold has retreated from Friday’s high of 1,517.98, which was the highest since October 3. The metal snapped a four-day rising streak yesterday and is now at 1,492.22, having failed to close above the 55-day moving average at 1,505 since October 9. The 100-day moving average is at 1,466.

Gold Daily Chart

In other markets, US indices edged higher, with both the NAS100 and SPX500 indices hovering below record levels. The yen was little changed versus the US dollar at 108.96 and 0.03% weaker against the Australian dollar at 74.61. The pound struggled to maintain its foothold with Boris Johnson again attempting to get a December election passed through Parliament today.

Treasury to consider extending tariff exemptions

Lending additional support to the better risk sentiment, the US Treasury announced that it will start the process for considering extending certain exclusion from additional tariffs on $34 billion worth of China imports that were granted in December 2018. These are due to expire on December 28. The process includes a public comment period from November 1 to 30.

Calm before the storm on the data front

The slow start on the data calendar this week continues before we hit the busy period in the second half. A speech from RBA’s Lowe could bring some excitement, given the delicately-poised state of the RBA’s monetary policy, but UK Natiowide house prices are not. There are no data releases out of Germany or the Euro-zone and a speech from Bundesbank president Weidmann is the only event on tap.

The US session features S&P/Case-Shiller house prices for August and pending home sales for September. The latter is expected to show a 0.5% increase month-on-month, a slower pace than the +1.6% seen in August.