Gold Trades Lower Lows & Lower Highs – Risk-on Weighs
Gold opened at $1492.4 and has placed a high of $1498.4 and low of $1477.15 until now. Gold is currently trading at $1481.03 and has shown a bearish trend.
On Tuesday, a Chinese Foreign Ministry spokesman confirmed Trump’s comment on striking a “phase one” deal between the US & China. He said that it was true that both parties had reached a partial trade deal. He also said that Beijing had no differences in the account of trade agreement outcomes that was provided by Washington.
This statement from China reduced the demand for safe-haven assets, including gold, and made a drop in gold prices on Tuesday.
Bloomberg reported that UK and European Union negotiators made progress on Tuesday’s talks and were closer than ever before to reach a Brexit deal. EU’s officials have demanded the details of Brexit deal within hours rather than days ahead of the EU summit. This raised the optimism for the Brexit deal happening before the EU Summit has decreased the demand for safe-haven assets in the market. Hence, Gold prices fell sharply after this optimism emerged.
Besides the news front, the macroeconomic data from the US also supported the US Dollar and aided further downward movement of gold prices on Tuesday. At 1:00 GMT, the Empire State Manufacturing Index from the Federal Reserve Bank of New York showed growth to 4.0 against 1.1 expectations for the month of September.
Support Resistance
1486.84 1498.37
1480.5 1503.57
1468.97 1515.1
Key Trading Level: 1492.03
GOLD – XAU/USD – Technical Outlook
Gold managed to hold below 1,497 resistance, but the bearish trend is still not strong enough to drive sharp selling. For the moment, gold is gaining support above 1,477 level.
It’s the same level that supported XAU/USD during the previous week. It has now become a second bottom level, and odds of a bullish reversal and bearish breakout are equal. Above 1,477, we can expect a buy-in in gold up to 1,492 level. Alternatively, the bearish breakout of 1,477 can extend sell-off until 1,463.
Good luck!
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