The safe-haven-metal prices stopped its previous 3-day losing streak and rose to $1,720.61 from the 12-day low while representing 0.16% gains on the day mainly due to its safe-haven demand in the wake of intensified trade/political tensions between the U.S. and China. Moreover, the reason for yellow-metal latest gains could be attributed to the broad-based U.S. dollar weakness. Currently, the yellow metal is currently trading at 1,719.95 and consolidating in the range between 1,706.39 and 1,720.61. However, the traders will keep their eyes on the U.S. Federal Reserve Chair Jerome Powell's part in an online discussion.
The U.S. policymakers at the House of Representatives recently passed a bill to impose sanctions on the Chinese diplomats involved in violating the human rights in Xinjiang, which exerted some bearish pressure on the market and pushed investors to the safe-haven asset.
As well as, the U.S. President Donald Trump gave hints to impose another sanction on China by the week's end. Moreover, President Trump and Secretary of State Mike Pompeo warned that there are some more sanctions left to impose. In response to this, China has said that the U.S. administration was bluffing in sanctions threats against the Hong Kong bill.
On the flip side, the dragon nation did not take any action on the U.S. bill so far, and traders are cautious while thinking about how China will react to the U.S. bill. However, the U.S. bill is U.S. Secretary of State Mike Pompeo's comments, suggesting Hong Kong's "no autonomous" status from China. Whereas the New York Fed President John Williams suggested that the Federal Reserve is actively thinking about yield curve control (like the RBA) while saying that it could be a tool that complements other policies.
As we already mentioned that the reason behind the yellow-metal bullish bias could be associated with the broad-based U.S. dollar weakness caused by the positive sentiment in the Asian shares and U.S. stock futures on the day. The U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped 0.16% to 98.900 by 11:26 AM ET (4:26 GMT). Despite the fears of US-China struggle, the U.S. 10-year Treasury yields gain 1.5 basis points (bps) to 0.692% while Japan's NIKKEI gains 1.41% to 1,720.
Daily Support and Resistance
- S1 1662.76
- S2 1684.38
- S3 1696.49
Pivot Point 1706
- R1 1718.11
- R2 1727.62
- R3 1749.24
The yellow metal is trading bullish around 1,721, but recently it's been facing stiff resistance around 50 EMA on the 4-hour chart. Gold is likely to close below 50 EMA resistance, which holds around 1,725 area. Above this, the next resistance is likely to be found around 1,733 level, while retracement can be seen below the 1,721 level until 1,712 level. Let's keep an eye on the 1,721 level today. Good luck!