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Trade Talk Optimisms Dragging Down USD, Supporting Gold

Commentaries & Views

Yesterday’s close: Settled at 1210.9, up 8.7

Fundamentals: Safe-haven winds came out of the Dollar’s sails yesterday upon positive news on the trade front. Both the U.S and China confirmed a new round of trade talks to start soon. This comes on the heels of positive reports on trade talks with both Canada and the EU. The Dollar lost ground against all major currencies yesterday and this brought tremendous support to Gold. The Yuan which has lost as much 0.57% from its recent swing high. Still, Gold faces tremendous resistance overhead in order to spark a short covering rally. Furthermore, today’s U.S CPI data due at 7:30 am CT will prove to be critical for Dollar, rates and Gold.

Technicals: Gold ripped through the 1204 mark yesterday which we said would garner minor momentum. However, it has struggled to chew through first key resistance at 1210.9-1214.9. This level and then major three-star resistance at 1220.7 will both prove to be crucial in encouraging short-covering. The daily chart pattern for Gold has been contrastive of late and this should encourage shorts to get restless. We must continue to see a close above 1204 or the bears will regain the driver’s seat.

Bias: Bullish/Neutral

Resistance: 1210.9-1214.9**, 1220.7***, 1227-1228.5**, 1235.6**, 1244.6-1251.6***

Pivot: 1204

Support: 1193.9-1195.1**, 1187.6-1189.5***, 1178.5-1179.8**, 1167.1***

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