Gold prices closed at $1489.52 after placing a high of $1491.54 and a low of $1477.0. The overall trend for GOLD remained bullish that day.

At 17:30, the Core Retail Sales from the US came in negative as -0.1% against 0.2% expectations. The same went for Retail Sales, which came in as -0.3% against 0.3% expectations. At 19:00 GMT, the business inventories from the United States came as 0.0% against 0.3% expectations and supported US Dollar. The NAHB Housing Market Index of the United States also came in favor of US Dollars for the month of September as 71 against 68 expected.

The closely watched and most important macroeconomic data on Wednesday was the release of Retail & Core Retail Sales, which came in negative and lower than expectations weighed the US Dollar on hopes of further rate cuts from the Federal Reserve this year.

The weaker than expected sales data for the month of September indicates the weak economic growth and increased the need for further rate cuts from the Federal Reserve. Gold prices jumped after the release of retail sales and recovered the losses of yesterday.

The economic damage caused by the increased tariffs from both countries during the trade war has alarmed the most significant economies. Both countries now agree that the trade dispute should end, and the fear over economic damage has accelerated the mini deal.

Reports suggest that the White House is moving quickly to complete the Phase-one of the trade deal due to its effects on economic growth. The phase one deal included the standby of newly imposed tariffs on Chinese goods by the United States in return for increased purchases of US farm goods by China and some other measures and concessions.

It was reported last week during trade talks that China agreed to purchase about $40-$50 billion worth of US farm goods in a period of fewer than two years. But uncertainty developed over China’s promise after comments from Chinese negotiators that China will only buy US farm goods according to demand and market prices.

Furthermore, on Tuesday, the US House of Representatives passed a bill of Hong Kong Human Rights and Democracy Act in support of anti-government protesters in Hong Kong. The act entails the US government to consider annually whether it should continue to treat Hong Kong as a separate trading entity from China. The special status allows Hong Kong to exempt its goods and services from tariffs imposed by the Trump administration.

China, however, reacted angrily and slammed the US House of Representatives for passing such a bill. China warned the United States on Wednesday that American interests in China would suffer, and that it would take countermeasures against the US if that bill becomes US law.

The bill still needs to be approved by Senate and then signed by President to be passed into law, and Geng Shuang, a Chinese Foreign Ministry spokesman, has said that Hong Kong affairs were purely China’s internal affairs and should not be interfered into by outside forces.

He also said that if the relevant bill gets passed into law, it would not only hurt the interests of China but would also affect US-China trade relations and damage the interests of the United States as well. After this news, Gold prices surged amid the increased tensions and uncertainty over a trade deal between US & China, aiding in its upward direction.

XAU/USD – Technical Outlook

Gold hasn’t changed much in the past few days since it managed to hold below 1,497 resistance. The neutral bias seems strong enough to keep gold with in 1,492 – 1,477 trading range. Investors may keep selling positions below 1,494 area today. In the case of a bullish breakout of 1,492, we may see gold soaring towards 1,497 areas.