Gold Price Settles Lower After Dollar Edges Up As G20 Meet Gets Underway

November 30, 2018

New York (Nov 30)  Gold prices edged lower amid cautious trades on Friday, as the US dollar gained in strength against most major currencies.

The focus is now on the G20 summit and the much awaited meeting of the US President Donald Trump and Chinese President Xi Jinping, on the sidelines of the summit.

Markets across the globe await the Trump-Xi meeting and hope the two leaders would arrive at a deal that will help ease trade war concerns and prevent a global economic slowdown.

According to reports, Trump said he was close to doing something on trade with Beijing but is not sure if he wanted to do it.

In the event of Trump and Xi Jinping failing to reach a deal of sort to de-escalate the trade war, it is very likely that tariffs imposed by the US on Chinese imports will raise to 25% in January. Additionally, there is a possibility of more imports from China, worth several hundreds of billion dollars, falling under the tax net.

Meanwhile, traders are also speculating on future rate hikes from the Federal Reserve. The minutes of the Fed's November meeting suggest a rate hike in December, but indicate there may not be three increases in rates next year as projected earlier. According to the minutes, a few participants expressed uncertainty about the timing of future increases.

Also, a couple of participants are noted to have warned that further increases could unduly slow economic growth and put downward pressure on inflation and inflation expectations.

The dollar index gained about 0.4% at 97.15.

Gold futures for February ended down USD4.40, or 0.36%, at USD1,226.00 an ounce. On Thursday, gold futures for February ended up USD0.60, or 0.05%, at USD1,230.40 an ounce. For the week, gold futures shed about 0.3%, while for the month, they climbed up 0.9%.

Silver futures for March settled at USD14.217 an ounce.

In US economic news, a report from MNI Indicators showed Chicago-area business activity unexpectedly recorded its most impressive performance in November. MNI Indicators said its Chicago business barometer spiked to 66.4 in November after falling to 58.4 in October. Economists had expected the index to edge down to 58.0.

The unexpected jump reflected increases across all five of the barometer's sub-components, with resurgent orders, solid output and higher unfinished orders the month's key drivers.


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