U-Turn in Gold – Risk Aversion Hikes over Trade Tensions
Arslan Butt • 1 min read
On Tuesday, gold fell dramatically to $1,253 despite the sharp selling in the U.S. equities. But it has managed to recover its earlier losses during the Asian session today and now it’s trading near $1,259. Is it a bullish reversal? I don’t think so…
Gold – XAU/USD – Fundamental Analysis
As discussed earlier in FX Leaders June 27 – Economic Event’s Brief, the greenback remained steady against a basket of currencies despite worse than expected consumer confidence. But gold fell to $1,253 despite a drop in the confidence board’s index which sank to 126.4 from a revised 128.8 in May.
On Tuesday, the groups symbolizing America’s largest retailers, car manufacturers and the agriculture industry notified the “serious negative economic impacts” of Donald Trump’s trade conflicts. They also announced backing for a bill that would rein in Trump’s powers – sort of an uncertain event causing an increase in the safe-haven assets like gold, Japanese Yen, and Swiss Franc.
Gold – XAU/USD – Technical Outlook
For the moment, gold is facing a resistance near $1,261 along with a support near $1,253. The bearish channel on the hourly chart is also extending the support to the selling sentiment of investors. All we need is to wait for the closing of an hourly candle. If it closes below $1,261/60, we may have a nice chance to take a sell forex trading signal.
Gold Hourly Chart – Bearish Channel
Lastly, gold prices are still trading below 50 – periods EMA which is also supporting the bearish trend.
Key Trading Level: 1261.87
Gold – XAU/USD – Trade Idea
I’m sticking with the same old plan of placing my sell limit near $1,261 with a stop near $1,265 and take profit at $1,253. Good luck!