Gold prices dipped to two-week lows on Tuesday after four days of losses. The bullion received support around the $1,451 level and bounced slightly, as investor optimism seems to be waning early in Europe. In the weekly charts, the picture remains bearish amid the lingering hopes for striking a so-called interim trade deal between the US and China.
Also, some negative pressure on the yellow metal came from Fed’s Powell speech on Monday. The central bank governor pointed to a favorable outlook on the US economy, suggesting the monetary authorities will leave rates on hold for the time being. As a reminder, gold demand picks up when rates are lower.
The precious metal remains within the downtrend channel and shows little signs of a breakout, mainly amid rising chances for a trade deal between the world’s two largest economies. In recent developments, trade negotiators from the US and China held another phone call this morning and reached consensus on how to resolve related problems.
In a knee jerk reaction, investors cheered the reports but the optimism has waned quite quickly due to a lack of details. Now, markets need to see the concrete progress on this front to stay afloat. Otherwise, some profit taking could follow which would benefit gold prices. Should risk sentiment continue to deteriorate in the short term, the bullion may regain the $1,462 area.