Daily Brief, Sep 2: Labor Day Holiday, Gold Gaps Higher Amid Boosted Safe Haven Appeal

Posted Monday, September 2, 2019 by
Arslan Butt • 2 min read

The US dollar is trading slightly lower, losing 0.07% to trade at 98.787 on Monday, with the Chinese yuan directed toward its biggest monthly drop in 25 years as the two countries rolled out new retaliatory tariffs on each other on Sunday. During the previous week, the dollar index was 0.02% lower at 98.483, concluding the month mostly unchanged after having been thrashed around by trade headlines.

Recalling our weekly outlook, we forecast the safe-haven appeal to kick-in on Monday market open over the US implementing additional 5% tariffs on $125 billion of goods from China. Traders fear the intensifying trade conflict could drive the US economy into recession. That’s exactly what has happened – gold prices inched higher to open at 1,533 while these were closed at 1,520 on Friday.

Labor Day Holiday 

The economic calendar is muted today as the US and Canadian banks will be closed in observance of Labor Day.

Most forex brokers remain open for every holiday except Christmas and New Year’s Day. Stock markets and banks have slightly different holiday schedules. However, it gets really hard to trade the market due to abnormal volatility and noisy trading.

Why Traders Care

Banks facilitate the majority of foreign exchange volume. When they are closed the market is less liquid and speculators become a more dominant market influence. This can lead to both abnormally low and abnormally high volatility.

GOLD – XAU/USD – Bullish Gap, How to Trade It? 

On Monday, the precious metal gold prices gained early as the United States and China launched fresh tit-for-tat tariffs on each other’s imports, escalating the prolonged trade war and adding to fears of a global economic slowdown.

However, the gold prices also covered up the gap over sentiments that the United States and China hinted that trade discussions between both sides could start again. The trade war is still on, but investors seem to do profit-taking on overbought gold ahead of the weekend.

The precious metal gold, which stays supported over the boosted safe-haven appeal, has started dropping now. China’s representative Gao Feng said that China will not retaliate against the United States President Donald Trump’s latest tariff move.

GOLD – XAU/USD – Technical Outlook

Precious metal gold has already covered the initially placed gap and seemed bearish below 1,537 as it was staying below this level since during the Asian open. Whereas, the 14 periods EMA is signaling a bullish trend while supporting gold around 1,524. Immediate resistance is at 1,532 and closing above this level is likely to bring more buyers until 1,544.

So, we are staying bearish below 1,532 today and so far the market is in our favor. For now, gold is heading towards 61.8% Fibonacci support area of 1,517.

XAU/USD – Technical Levels

Support Resistance

1513.9 1530.12

1507.36 1539.8

1491.14 1556.02

Key Trading Level: 1523.58

Gold – XAU/USD – Trade Plan

We may see a bearish trend in gold below 1,528 until 1,520. Below this, gold can go after 1515. Major resistance will be 1,532 and 1,544.

Good luck!

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