Gold bounces off 1-month high as dollar rises for second session

Gold futures tilted lower during the Asian session on Friday, bouncing off the highest level since Nov.7, as the US dollar rebounded from its lowest since Nov.4, in line with the inverse relation between them, following the release of economic data by major Asian economies, and ahead of the US Fed and the ECB meetings in addition to the British snap election later this week. 

Gold futures (February delivery) fell by 0.02% to $1,463.80 an ounce as of 03:17 GMT, after opening at $1,464.10, the futures gaped lower after closing on Friday at $1,465.10, while the US dollar index rose by 0.01% to 97.71 after it opened at 97.70. 

The Customs General Administration of China (CGAC) revealed its reading for the trade balance index, which showed the surplus has contracted to 274 billion yuan ($38.7 billion) vs. 301 billion yuan ($42.8 billion) in October, lower than forecasts of a surplus of 300 billion yuan  ($44.5 billion), despite exports declining and imports rising during last month.

The decline in Chinese exports for the fourth straight month in November falling by 1.1% compared to last year, is due to China's exports to the US falling by 23%, which reflects the impact of the ongoing trade war on trade volume between the two countries.

The White House economic advisor Larry Kudlow said on Friday, that the US and China trade deal is close, but the Trump administration is ready to end these talks if the deal is no good for Washington, adding that the US is ready to increase the tariffs on Chinese goods as scheduled on December 15, in case a trade agreement isn't reach, which is a tool used by the US within their talks to push China to increase its purchases of US farm goods.

The markets are cautiously anticipating the date for the US planned tariffs hike by 15% on Chinese goods worth $160 billion is due December 15, while President Donald Trump said last week that a trade agreement with China might have to wait until after the presidential election in 2020, and his administration will see what happens in the coming period.

Otherwise, the Japanese economy revealed its seasonally adjusted reading of the GDP, which showed an acceleration in growth to 0.4% vs. 0.1% in the preliminary reading for Q3 and higher than 0.3% in Q2, while the annual reading of the GDP measured by prices, showed stability at 0.6%, in line with forecasts vs. 0.4% in last reading.

The Japanese current account reading, showed the surplus expanded to 1,817 billion yen vs. 1.613 billion yen last September, higher than forecasts of a surplus to 1,807 billion yen, while the seasonally adjusted reading of the same index showed surplus of 1.732 billion yen vs. 1.485 billion yen in September, also higher than forecasts of 1.731 billion yen.

Investors are also waiting for the US Federal Reserve's monetary policy meeting this week as the US Fed is widely expected to hold interest rates at between 1.75% and 2.00%, in addition to the FOMC members' forecasts on growth, inflation and unemployment as well as the future interest rates for the next 3 years.

Federal Reserve Governor Jerome Powell will hold on Wednesday, half an hour after the meeting ends to comment on the Fed's decisions, which has been aggressively criticized recently by President Trump, who is calling on the Federal Reserve and his Governor Powell to move forward in cutting interest rates to zero or below.

While on Thursday the European Central Bank meeting will launch, which is likely leave the interest rates unchanged at zero and maintain the marginal lending rate of 0.25%, in addition keeping the deposit rates at minus 0.40%, and continue on the quantitative easing program of €20 billion per month if necessary.

Which will be followed by a press conference of the ECB Governor, Christine Lagarde, which is her first press conference after she took office after former Governor Mario Draghi last month, which also comes amid the snap parliamentary election in the UK that may be pave the way for the Brexit by the end of January.