Gold was a little choppy overnight in a range of $1288 – $1296, largely fading movements in the US dollar.
It traded down to its $1288 low during Asian and early European time, as the DX rose to 93.74, boosted by more positive news on US-China trade.
The Chinese Finance ministry said it will slash import tariffs on passenger vehicles from 25% to 15%, and cut duties on car parts to 6%.
Shortly thereafter however, the DX retreated to 93.29, forced lower by strength in the pound ($1.3415 - $1.3490, hawkish comments from the BoE’s Vlieghe - expects interest rates to rise around 0.25-0.50% over the 3-year forecast period) and a bounce in the euro ($1.1756 - $1.1829 – falling Italian bond yields).
Gold rallied in response, and took out resistance at the past 3 sessions’ highs ($1293-94) to reach $1296 (some short covering seen). Mostly firmer global equities were a headwind for gold, with the NIKKEI off 0.2%, the SCI flat, Eurozone markets were up from 0.1% - 0.2%, and S&P futures were +0.2%. Strong oil prices (WTI to $72.75, fresh 3 ½ year high) were a tailwind for stocks.
US stocks opened firmer (S&P +9 to2741, automakers lead gainers on the overnight Chinese tariff reduction), with a stronger reading on the Richmond Fed Manufacturing Index (16 vs. exp. 8) aiding the move.
The US 10-year bond yield ticked up from 3.058% to 3.078%, and the DX climbed back to 93.62. Gold was pressured lower, and traded down to $1291.50.
However, markets reversed in the afternoon, after Trump said that he was not satisfied with the US-China trade talks, there was no deal with China on ZTE, and also remarked that the highly anticipated summit with North Korea might not...