Gold Standstill as Market Sentiment Turns to Risk-off
Arslan Butt • 1 min read
Fellows, this week is really important from a trading point of view as the U.S. – China trade war begins on July 6. Moreover, investors’ focus remains on the U.S. labor market figures which are coming out on Wednesday and Friday. Today during the Asian session, gold gains support near $1245 after falling to six months low. Here’s a trading plan for today…
Fundamentally, the dollar is gaining momentum on the back of two rate hikes in 2018. There’s a strong negative correlation between dollar and gold which is why strength in the Greenback is driving bears for the bullion.
On the flip side, there’s an immense amount of uncertainty in the market as the U.S. will slap 25% tariffs on up to $50 billion of Chinese goods on July 6. This will not only hurt the Chinese markets but also shake the business of the U.S. importers. Consequently, investors have begun a sell-off in the indices which is supporting the gold. Refer to Everything you need to know about U.S.- China Trade War for the full story.
Gold has come out of the bearish channel. The breakout took place at $1,251 and gold is still trading outside the downward channel. It’s sort of a bullish signal for traders. But at the same time, the 50 periods EMA is extending a solid resistance near $1,252.
Gold – XAU/USD – Trade Idea
Gold has a very strong support near $1.246 today. I will be looking to stay bullish above $1,246 to target $1,252, while selling entry will be preferred below $1,252. Good luck and stay tuned for more updates!