Gold stays close to 7-week low despite recent doubts over US-China trade deal

• Gold bears the burden of strong USD, receding calls of the Fed’s further easing.
• Trade optimism seems to fade with China’s strong demands.

Although recent updates concerning the US-China trade deal keep recent optimism in check, strong US dollar (USD) and calls for a halt in the US Fed’s rate cuts seem to please the Gold bears. The bullion stays close to $1,484 by the press time of Wednesday morning in Asia.

The safe-haven dropped to the seven-week low on Tuesday after optimism surrounding an initial trade agreement between the United States (US) and China joined receding pessimism concerning the US economy, based on upbeat ISM data.

While conveying the challenges to the trade optimism, The Telegraph says, “The biggest sticking point is the complete withdrawal of US tariffs. Since summer 2018, the White House slapped duties of up to 25% on about $360 billion worth of Chinese imports. Beijing has refused to budge on this issue since the tariffs have hurt the country's supply chain.”

On the other hand, Dallas Federal Reserve (Fed) President Robert Kaplan recently crossed wires and indicate that the Fed’s presently easy money policy is where it needs to be.

With this, the market’s risk sentiment seems to have challenged as S&P 500 takes a halt from the previous run-up around 3,071. Further, the US Dollar Index (DXY) nears three-week high of 98.01 that was flashed the previous day.

Investors will now keep watching over trade headlines while also observing the Fedspeak for fresh impulse amid a lack of major data.

Technical Analysis

100-day Simple Moving Average (SMA) near $1,475 seems to be the immediate key support, a break of which can drag prices to October low close to $1,455. Alternatively, buyers will look for $1,500 and recent highs around $1,515 during the pullback.