Hopes that Washington and Beijing will manage to strike at least a partial trade deal fueled risk-on sentiment across the board in the global financial markets. As a result, safe-haven gold failed to extend the rally initiated in the second half of last week. The bullion registered local highs just below $1,516 on Friday and retreated back to the levels marginally above the key $1,500 psychological handle.
Both China and the US expressed confidence in striking a phase one deal, with Washington considering rolling back tariffs on $112 billion in Chinese goods and expecting Beijing will make similar concessions. Against this backdrop, major global indices continue to post records, anticipating a final deal at some point. In turn, a widespread optimism caps the upside attempts in gold prices at this stage.
Nevertheless, should the two sides fail to give some fresh positive signals in the near term, the optimism could fade gradually. In this context, the bullion may receive some boost after a local retreat. Also, gold may trim losses if the upcoming US service PMIs come in worse than expected. Should the prices fail to stay above the $1,500 level in the near term, the immediate support will come around $1,495 and then at $1,491.