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Gold at 3-Month Low for Third Day as Near-Term Bull Case Erodes

Investing.com – Gold is edging further away from the $1,500 mark, raising questions about the near-term bull case for the yellow metal, which is now at three-month lows.

Gold futures for December delivery on New York’s COMEX settled down $5.80, or 0.4%, at $1,457.10 per ounce after plumbing three-month lows for a third straight day at $1,448.95. It fell 3.2% last week, its most for a week since November 2016.

Spot gold, which tracks live trades in bullion, was down $2.21, or 0.15%, at $1,456.20 per ounce by 3:34 PM ET (20:34 GMT). Its session low was $1,448.29, a bottom since August 2.

Gold was pressured by the inertia of gold bulls as attention remained riveted on the U.S.-China trade war and continued hopes among a broader cross section of the market for a deal soon between presidents Donald Trump and Xi Jinping.

The closure of the bond market and many banks for Monday’s Veterans Day had crimped volumes too, limiting upside intervention, traders said.

“I see gold going back down to $1,400 potentially, as it has broken out of its range, although there’s not really been a washout yet,” said Eric Scoles, market strategist for precious metals at RJO Futures in Chicago.

“Big picture, I remain bullish on gold in 2020 given the risk hedging typical in a presidential year,” Scoles added. “It’s just the immediate picture that’s in question as everything major has been priced in and there just aren’t enough drivers to push the price back to $1,500 or beyond in the near term without a major international event of some kind.”

Gold has struggled over the past two weeks after Federal Reserve Chairman Jay Powell suggested that the U.S. central bank’s third-straight rate cut of a quarter point in October would be its last for the year.

Powell is expected to reiterate his view that the Fed is on hold with rates when he testifies before the Congressional Joint Economic Committee in Washington on Wednesday and the House Budget Committee on Thursday on the central bank’s outlook on the economy, inflation and monetary policy.

Market watchers will also have the chance to hear from eight other Fed officials who are speaking this week, including New York Fed chief John Williams, who said on Friday the U.S. economy is in a good place, reiterating his view that the interest-rate cuts made this year should appropriately address potential risks to the economy.

A fresh round of U.S. economic data will be closely watched at a time when markets are trying to gauge the impact of the trade conflict on the outlook for growth.

On the data front, Wednesday brings October's consumer price index. Core year-on-year CPI is expected at 2.4% and headline at 1.7%. But the Fed's favorite measure of core personal consumption expenditures is running around 1.6%, hovering mostly below the 2% target since before the financial crisis.

In more U.S. data on Friday, October retail sales and industrial production data will shed light on whether the consumer can continue to drive growth in the face of a struggling manufacturing sector and months of trade tensions.

On the global front, data from Germany on Thursday will show whether the euro zone’s largest economy slid into a recession in the third quarter. Japan also releases Q3 GDP figures on Thursday.

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