Gold Flat as US Dollar Recovers Mojo

Gold was flat on Thursday as comments from the White House on the US-China trade deal steered investors to the US dollar. The stronger dollar put pressure on the yellow metal as safe havens rose. Gold will continue to be in demand as geopolitical risk remains high but for now it was overpowered by the greenback. In the US two important deadlines are in the horizon.

The Democrats and President Trump need to reach an agreement ahead of February 15 to avoid another government shutdown. March 1 could mark the start of new US tariffs against China if a deal between the two biggest economies is not struck in time.

The Fed turned dovish in January, but a strong employment report could put the central bank back on track sooner rather than later putting pressure on gold. The U.S. Federal Reserve lifted interest rates four times in 2018 and until mid-December was expected to hike twice in 2019. The same way forecasts were quickly adjusted after the market sell-off could be switched back if fundamentals validate the Fed to reassume its monetary policy tightening.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza