Gold Rally stops
Gold has returned some of its strong profits on the last day and a half. At the time of writing, the precious metal traded unchanged in the week, hovering just above the $ 1400 level, at $ 1402. The precious metal has weakened in part due to new comments from Powell and Bullard of the Fed, which were much less moderate than expected, which allowed the dollar to find much-needed support and undermine precious metals denominated in dollars. In addition, the shares managed to recover considerably this morning, thus reducing the attractiveness of safe-haven gold, after Steven Mnuchin, Secretary of the Treasury of the United States, said that a trade agreement with China is 90% complete. The shares found additional support after Bloomberg reported that EE. UU It is willing to suspend the next round of tariffs with an additional $ 300 billion of Chinese imports, while Beijing and Washington are preparing to resume trade negotiations. Bloomberg cited people familiar with the plans but added that the decision, which is still being considered, may be announced after a meeting between the two Presidents at the G20 summit.
Expect more such headlines before the G20 meeting, but ultimately no agreement will be complete until it is signed. We are a bit skeptical at this stage. But this is all that was needed to eliminate yesterday’s losses in the stock markets, so it is so important that speculators remain agile. With regards to the decline of gold, this could become a small problem in what is becoming a strong bullish trend for the metal. Given that the central banks of the developed economies are extremely moderate in the midst of trade and growth concerns, it is likely that yields will remain depressed for a while, allowing gold to shine. Even if there is a positive resolution in the commercial dispute between EE. UU And China at the G20 meeting, this may not be bad news for gold, as it will increase the demand outlook for China, one of the main gold consuming nations.
Finally, the decline in gold may not be a bad thing from a purely technical point of view, as it can encourage immersive buyers and those who missed the rally initially to intervene when the metal approaches key support levels. below the market. Among the key support levels we are monitoring, the range of $ 1358- $ 1375 is the most important region, since this was the area of previous resistance. As long as the metal stays above here, the technical bias will continue to be bullish, even if it continues to fall for several days to get there. Obviously, this area is some distance below where gold is being exchanged at this time, which means that if gold comes to this region, it will require a lot of effort from the sellers. Perhaps, a more optimistic scenario would be if instead of a price fall, gold exceeds its conditions of “overbought” over time. what do I want to say with that? Basically, a consolidation near its maximums is around $ 1,400.