Gold at a Major Turning Point?

Lara Abi Rafeh – Mtv

Gold is declining, after soaring to record levels, and its luster seems to have faded after erasing all the gains it made during the month of October. With US President Donald Trump’s visit to Japan, the second stop on his Asian tour, the world is anticipating a development that could completely change the global market scene. Is the trade agreement between China and the United States nearing realization? And how will it affect gold?

Gold prices fell to below $3,900 an ounce, after a wave of optimism about a potential trade agreement between the world’s two largest economies reduced demand for the yellow metal as a safe haven. The declines we are witnessing in gold have reached about 10 percent, meaning that all the gains of November have been erased, based on positive news from China and America.
While senior Chinese and American economic officials are discussing a framework for a trade agreement expected to be presented to Trump and his Chinese counterpart Xi Jinping during their expected meeting on Thursday, investors are living in a state of cautious anticipation of what the coming days may bring. Here, financial market strategist Jad Hariri tells the mtv website that “this positivity regarding reaching a trade agreement leads to a decline in gold prices, in addition to the main reason, which is profit-taking by investors during the past month.”

So, what are the expected scenarios if an agreement is reached? And what if it falters?
Hariri answers: “If an agreement is not reached, the markets will return to their normal state, that is, to the rise we were witnessing. But it is also possible for gold to continue its downward path to reach $3,800 or $3,750, but this is linked to reaching an agreement with China and reaching a truce in the trade war.”
The agreement, if reached, may redraw the map of financial markets and reduce the need for safe assets such as gold. In addition, Hariri points out that there is also the factor related to changes in US interest rates. The US Federal Reserve is preparing for its expected meeting on Wednesday amid widespread expectations that it will announce a new cut in interest rates. Here, Hariri says: “If an agreement is not reached between China and America and we witness a sharp reduction in US interest rates, then gold will recover again and we will return to price increases.”

Between caution and optimism, gold stands at a new crossroads, and all eyes are on the yellow metal. Trump’s visit may determine the fate of gold, and if predictions of reaching a historic trade agreement between Washington and Beijing come true, November may be the month of a major turning point.