XAU/USD outlook: Gold is consolidating after Friday's 2% pullback
|XAU/USD
Gold holds within a narrow consolidation on Monday following almost 2% pullback from new record high ($4380) on Friday, driven by surprise comments from President Trump that the latest tariffs on China’s imports won’t be sustainable.
Reconciliating tones after a tough rhetoric during the past week, eased bullish pressure and sparked a partial profit taking, which resulted in the biggest daily loss since Nov 25.
However, Friday’s action closed well above $4200, significant support (the first lower breakpoint), keeping overall firm bullish structure intact and signaling that Friday’s drop, although quite significant, would mark positioning for fresh push higher.
The notion is supported by the fact that Trump’s comment should be viewed as isolated case (I was expecting him to soften his stance, as idea of adding 100% on existing tariffs would probably cause the equal damage to the US economy) as Trump aimed to threaten China over mounting problem with exports of rare earth metals, rather than imposing new taxes.
The factors that underpin safe haven demand remain unchanged, with the latest protest in the US, threatening to further destabilize already fragile political situation adding to high global uncertainty.
On the other hand, technical picture on daily chart weakens, as stochastic emerged from overbought territory, 14-d momentum is heading south and daily Tenkan / Kijun-sen turned sideways.
This warns that correction might not be over yet, but the price may hold in extended consolidation rather than attempting to dip further.
Holding above $4200 to keep bias with bulls and guard next trigger at $4162 (daily Tenkan-sen) violation of which would put bulls on hold and open way for deeper correction.
Res: 4300; 4330; 4380; 4400.
Sup: 4219; 4200; 4162; 4131.
Interested in XAU/USD technicals? Check out the key levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.