Investing.com – The safe haven many expected to be gutted in the euphoric aftermath of the U.S.-China phase one trade deal is still alive. Gold prices were rock steady at the key $1,480 per ounce mark amid pessimism over the trade deal announced by the Trump Administration on Friday.
Gold futures for February delivery on New York’s COMEX settled down 70 cents, or 0.04%, at $1,480.50 per ounce after hitting a one-week high at $1,484.25.
Spot gold, which tracks live trades in bullion, slid by just 23 cents, or 0.02%, to $1,475.33 by 2:25 PM ET (19:25 GMT).
Stocks on Wall Street hit record highs for a third-straight session as upbeat domestic data from China added to the euphoria of investors in equities about the phase one deal. White House Economic Adviser Larry Kudlow also went on Fox News to authenticate the deal, which he said has been "absolutely completed."
But investors in gold bought instead into the more cautious narrative that there were a lot of things announced by the Trump Administration about the deal that the Chinese were uneasy about, explaining Beijing’s lack of enthusiasm to speak about the deal since Friday.
A particular sticking point for the Chinese, going by media reports, has been demand of annual farm purchases of about $50 billion by U.S. President Donald Trump to make the deal good. China could simply source grains and feedstock from Brazil and elsewhere for better prices and precise quantities, without such forced commitments, trade sources said.
“The yellow metal is holding strong, despite the fact that we've now scratched off many of the worst-case scenarios in just a few weeks,” TD Securities said in its daily note on gold.
TD noted that gold has remained resilient in the face of last week’s Federal Reserve’s indication it will halt rate cuts for now and after the U.K. election that has more or less paved the way for an orderly Brexit.
“Gold has maintained its luster because the Fed's reaction function remains asymmetric, which suggests they will either cut rates further if growth disappoints or stay the course if growth recovers, ultimately pressuring real rates further in either case,” TD Securities said. “This lends strength to the view that gold will continue to bounce higher into 2020.”
Spot gold is up 15% on the year, while gold futures are showing a gain of 13%.