Gold rises; traders assess the impact of the trade agreement in the markets

Gold prices rise on Monday due to speculation about the potential success of the trade agreement between the United States and China that was signed last week.

The gold futures for February delivery on the Comex division of New York increased 0.1% to $ 1,562.05 at 7:27 pm (CET).

The precious metal initially fell after China agreed last week to buy at least $ 200 billion in US products over the next two years, but recovered part of its losses when analysts began questioning the potential success of the deal, and chances that the risk of trade war will return as both nations have maintained much of the tariffs that had been imposed on each other before the agreement.

On the other hand, the US Department of Commerce published robust housing and retail sales figures on Friday, reducing the chances of the Federal Reserve cutting interest rates later this month.

The Fed cut interest rates by a quarter point for the third consecutive month in 2019, before ending that acceleration cycle in December. The US economic data is mostly optimistic right now, so analysts do not believe that the central bank will embark on a new round of cuts unless the trade war resurfaces.

“After a notable positioning push, the precious metal is back on the rise,” TD Securities said in a note. “Along with the positive growth expectations comes the potential for inflation to rise, and without a proportional response from the Fed, this would translate into lower interest rates.”