Gold eases to near 2-week low ahead of U.S.-China trade deal

Gold eases to near 2-week low ahead of U.S.-China trade deal

Gold prices plunged to their lowest in nearly two weeks as stronger-than-expected Chinese economic data and the imminent signing of a preliminary U.S.-China trade deal boosted investors' sentiments. Data released earlier today showed Chinese exports rose for the first time in five months in December, while imports also surpassed expectations.

Moreover, news that the United States has dropped China's designation as a currency manipulator added to the optimism. However, U.S. Trade Representative Robert Lighthizer stated that the details of the deal will be made public prior to the signing ceremony on Wednesday.

Spot gold declined 0.1 percent to $1,543.56 per ounce by 0821 GMT, having touched a low of $1535.78 earlier, its lowest since January 3. It recorded a high of $1611.27 per ounce last Wednesday, its highest since March 2013.

Meanwhile, investors await the signing of the Phase 1 trade deal between the United States and China on Wednesday, although talks on a Phase II deal are likely to drag on for months.

However, this temporary optimism does not fully evade the chances of a trade war that has taken global financial markets by a storm over the past one and a half years.

The yellow metal is also highly sensitive to changes in the interest rate but as of today, according to the CME FedWatch tool, the probability of a no-change has risen to 87.3 percent while that of an increase is 12.7 percent, while chances of a rate cut remains nil.