Good morning, traders.

The economic calendar is a bit muted today since the release of the RBA cash rate during the Asian session. The Reserve bank of Australia left the interest rate unchanged at 0.75%, driving dramatic spikes in the Australian dollar and New Zealand dollars earlier today.

At the moment, investors may focus on the technical aspect of the market, along with the ongoing trade talks between the US and China. Gold prices closed at $1462.45 after placing a high of $1465.42 and a low of $1453.92. Overall, Gold showed no movement because it closed at the same point where it started its trading session on Monday.

Gold prices remained range bound on Monday after ending November with a 3% loss. At the start of the trading session on Monday, Gold dipped due to increased demand for riskier assets and higher US Yields. The 10- Year Treasury bond yield was higher at 1.843%, and 30-Year Treasury bond yield was also higher at 2.283% at the starting day of the week.

Another factor contributing to the drop in yellow metal prices on Monday was the unexpected expansion in the factory activity in China. During November, the factory activity of China expanded, and this news urged traders to invest in riskier assets instead of safe-haven assets.

The private survey of Chinese factory activity showed a growth in the month of November when, at 6:45 GMT, the Caixin Manufacturing PMI was released as 51.8.
After the increased demand for riskier assets due to unexpected expansion in Chinese factory activity and higher US Treasury yields, Gold prices started to fall but reversed their direction in the late session on Monday.

On the other hand, when macroeconomic data from the Unites States of America was published, Gold prices reversed their direction in an upward trend. The drop in ISM Manufacturing PMI weighed on the US dollar and gave strength to yellow metal prices.

At 19:45 GMT, the Final Manufacturing PMI from the United States was published for the month of November and showed growth to 52.6 from the expected 52.2 and supported US dollar. At 20:00 GMT, the closely watched Purchasing Manager’s Index (PMI) from the Institute of Supply Management (ISM) was published, which showed a drop to 48.1 from the expectations of 49.2.

The construction spending from the United States also dropped to -0.8% from the expectations of 0.3% and weighed on US dollar. The ISM Manufacturing PMI showed a minor drop of 46.7 from expected 47.0.

The Chinese state media reported on Sunday that China wants a cancelation of tariffs as part of the phase-one deal, which Trump’s administration has already denied. There is no clear indication that when both countries would sign the agreement. Last week, Trump increased tensions between both countries after passing the legislation of Hong Kong Bill.

On Monday, Trump also spoke with Commerce Secretary Wilbur Ross, who afterward told the media that it was time for US & China to make a trade deal before the next round of tariffs were implemented on December 15. He said that the US would not hold back on tariffs hike if China drags its feet on the phase-one deal. This latest news from the US increased uncertainty on phase-one trade deal completion before December 15 and also supported Gold prices.

The tariff threat & weaker than expected macroeconomic data from the US helped Gold prices recover their losses, and end the trading day at the same level. The daily candle on the chart showed a line instead of a specific candle on Monday.

GOLD – XAU/USD – Forex Trading Signal
Gold is trading below a strong resistance level of 1,465 level, which is extended by a bearish trendline on the 4-hour chart. On the lower side, support prevails around 1,452.

XAU/USD – Technical Levels
Support Resistance
1455.8 1467.31
1449.15 1472.18
1437.64 1483.69
Key Trading Level: 1460.66

The breakout setup is getting strong; sooner or later, we may see a sharp breakout in gold. It can possibly be on NFP later this week, or before that in case we hear further on the US-China trade deal. For now, consolidation and sideways trading can be seen within 1,464 to 1,452.

Good luck!