Gold: Greenback buyers, risk-on drive safe-haven to multi-day low
|- Upbeat trade/political news strengthen initial USD positive sentiment backed by calls for less extreme Fed rate hike.
- 20-DMA offers the halt to $1,400 round-figure.
With the US Dollar (USD) buyers cheering recent positive news/headlines, Gold drops to multi-day low as it makes the rounds to $1,417 heading into the Europe markets’ open on Tuesday.
Not only the US lawmakers ability to have a strong solution for the government shutdown but positive developments surrounding the US-China trade deal also please the greenback bulls.
Signals for less extreme Fed rate cut by the NY Fed triggered initial USD buying ahead of the Federal Reserve policymakers’ blackout period on Friday.
Investors showed little reaction to the geopolitical tension concerning Iran whereas South Korea’s gunshot to Russian military plane was also the largest ignored.
The US and Chinese trade negotiators will meet in Beijing the next week whereas the US President Donald Trump readies for a positive start by allowing the tech companies to sell inputs to China’s Huawei.
Asian equities cheered the momentum with the US 10-year treasury yield also being on the front-foot during early day.
Coming up on the investors’ radar will be some of the second-tier housing and manufacturing data from the US while qualitative headlines can keep dominating the market sentiment.
Technical Analysis
FXStreet Analyst Ross J. Burland expects the 20-day moving average (DMA) to be immediate support ahead of $1,400 round-figure:
Gold had been bumping along the symmetrical triangle's prior resistance following a breakout through the 1450 level which was followed by a fade back to the symmetrical triangle. Should price hold below 1420/25, bears will then look for a run below the 1400 psychological level. The 23.6% Fibo of the latest swing lows and highs are located at 1398. The $1,373/76 zone comes into play thereafter which meets the 19th June spike correction lows and the 38.2% Fibo of the same swing ranges. Directly below the price in this move, we can see that the 20 daily moving average is located at 1413, this too is a key level to the downside as will the 50 and 100-days moving averages.
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