Good morning traders,

Gold prices closed at 1,946.55 after placing a high of 1,955.20 and a low of 1,924.55. Overall, the movement of gold remained bullish throughout the day. On Thursday, the precious metal recovered from the previous day’s slide of more than 3%, on the back of the unexpected rise in the jobless claims and the concerns over economic recovery that were mentioned in the minutes of the Federal Reserve meeting.

Although the policymakers downplayed the need for yield caps and targets, they were still concerned that the economy was facing a highly uncertain path, and more monetary support was needed, as mentioned in the minutes of the US Central Bank’s latest policy meeting.

Elsewhere, the macroeconomic data released in the US on Thursday was also against the US dollar, but it remained supportive of gold prices. At 17:30 GMT, the Philly Fed Manufacturing Index declined to 17.2 from the 21.0 that was forecast, weighing on the US dollar and ultimately adding to the gold gains.

The Unemployment Claims from last week rose back above 1 million, boosting the gold prices. The jobless claims during the previous week came in at 1.106M, against the expectations of 0.930M, weighing heavily on the US dollar. The US economy has regained only 9.3M of the total 22M jobs lost between February and April. The US Dollar Index fell from a near one-week high level, making the non-yielding metal cheaper for holders of other currencies.

Meanwhile, on Thursday, the Chinese commerce ministry said that China and the United States have agreed to hold trade talks in the coming days, in order to evaluate the progress made in the first six months of the Phase 1 trade deal, after it took effect in February. However, in response to the above-mentioned comment made by the Chinese commerce ministry, the Trump administration declined to acknowledge any plans to meet with China over the Phase 1 trade deal.

Commerce Ministry spokesman Mr. Gao Feng commented on the forthcoming discussions at a weekly briefing held online, but he did not elaborate. The video conference meeting that was originally envisioned for Saturday, August 15, the six-month anniversary of the launch of the trade deal, was postponed by President Donald Trump.

There has been no news regarding the scheduling of a new meeting, as officials are not responding to or commenting on any queries about plans to review the trade deal.

Furthermore, the tensions between the two nations have escalated further, after China’s foreign ministry said that Hong Kong would suspend an agreement on mutual legal assistance with the US, in a tit-for-tat response to the US ending some agreements with Hong Kong. On Wednesday, the US State Department declared that Washington had suspended three bilateral agreements with Hong Kong.

Meanwhile, the tensions between China and the US, regarding the South China Sea issue, is heating up, as the US ramped up shows of naval force, reminiscent of the introduction of armed conflict, in China-claimed waters on Tuesday.
The non-stop backfiring at one other, by China and the US, has raised concerns over a new cold war, and this provided support for the safe-haven gold prices on Thursday.

Daily Technical Levels
Support Resistance
1,939.49 1,972.14
1,918.57 1,983.87
1,906.84 2,004.79
Pivot point: 1,951.22

Gold is trading with a neutral bias at 1,949, and it continues to trade sideways after violating an upward trendline resistance level of 1,962. Closing of candles below this level could drive selling bias in the market. Overall, gold has completed a 38.2% Fibonacci retracement at the 1,952 level, and above this, the next resistance level remains at 1,968, which is extended by the 61.8% Fibonacci level. Gold may find support at the 1,939 and 1,923 levels. Good luck!