Gold Price Flashes Oversold Signal Following Massive Correction

gold price
Gold's yearlong rally took a pause this week, as risk appetite lowered demand for haven assets. | Image: Shutterstock

Gold’s yearlong surge took a pause this week, as investors exited risk-off assets in favor of stocks on the belief that the United States and China are inching toward a new trade agreement.

The yellow metal is down almost 5% from its September peak.

Gold Price Corrects Lower

Gold for December settlement, the most actively traded futures contract, bottomed at $1,493.10 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest in over four weeks. It would later consolidate right around $1,494.00 a troy ounce.

Gold price
Gold’s price corrects sharply lower this week. | Chart: Barchart.com

The latest slide dragged gold’s price closer to oversold levels on the relative strength index (RSI). The commodity is still up more than 16% year-to-date.

Silver – a commodity that has outperformed gold in recent months – also fell on Friday. The December contract for the grey metal plunged 66 cents, or 3.7%, to $17.52 a troy ounce.

Trade Optimism Fuels Risk Appetite

Bullion is plunging along with Treasury bonds after the United States and China exchanged ‘goodwill gestures’ ahead of next month’s planned trade meetings.

On Friday, China announced through Xinhua news agency that it will exempt American soybeans, pork and other commodities from its latest round of tariffs. The move offers negotiators a fresh start as they forge ahead with their October summit.

“We hope that the United States is as good as its words and will fulfill its promises, in order to create favorable conditions for cooperation in the agricultural field,” Xinhua said in a Friday news release.

The U.S. and China remain very far apart on several contentious issues, including Chinese industrial policy and intellectual property. Talks broke down in May after China reportedly walked out of an agreement that President Trump said would have been good for both countries. Talks have been at a virtual standstill ever since.

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments

* All comments must be approved by staff before appearing on CCN.com. We do not allow bad language, hate speech, nor verbal attacks on staff or other commentators. Some comments may be edited for clarification or if they are in breach of our comment policy. If you wish to delete your comment or data, please contact us.

Sam Bourgi

Sam Bourgi

Financial Editor of CCN.com, Sam Bourgi has spent the past decade focused on economics, markets, and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE, Yahoo Finance, and Forbes. Sam is based in Ontario, Canada and can be contacted at sam.bourgi@ccn.com or at LinkedIn. Visit his Muck Rack profile here. Sam Bourgi is a Trusted Journalist.

More from this author: