The demand for the precious metal seems to fade away since the release of U.S. Nonfarm Payroll. This week, gold traders are enjoying the choppy session, trading the narrow range of $1,290 – $1,306. Investors are confused about gold’s direction: half of the fundamentals are bullish and half are bearish.

The U.S. dollar and Treasury yields shifted amid concerns about the global trade after the U.S. imposed tariffs on its associates.

Secondly, the better than expected fundamentals from the U.S. are keeping the demand for haven assets in check.

Thirdly, Mexico also puts tariffs on the U.S. products, especially on steel and pork. That came in response to import duties on metals imposed by President Donald Trump. Is this a beginning of a trade war? Well, I’m also concerned, which is why fear is keeping dollar and gold on hold.

Lastly, the odds of the Fed rate hike on June 13 are really high which is why gold is facing a headwind to violate $1,301.

Just like fundamentals, the technical out is also pretty mixed. I’m looking at the 4- hour chart, the 50 periods EMA is supporting gold near $1,294, suggesting a bullish bias of traders. Whereas, the RSI is overbought.

Gold 4 Hour Chart

Speaking about the horizontal trendline, it’s also extending a support to Euro near $1,295 and a bullish engulfing candlestick pattern is suggesting a nice bullish sign.

Support Resistance
1295.55 1304.11
1292.91 1306.75
1288.63 1311.03
Key Trading Level: 1299.83

Gold – XAU/USD – Trade Idea

On the upper side, $1,299 is a very strong selling level. Whereas, $1,295 is a nice buying level. This leaves us with two options:

• Buy above $1,295 to target $1,299.
• Sell below $1,299 to target $1,294.

Whereas, I will be taking another buy position on the violation of $1,299 to target $1,306. All the best!