Gold prices seesaw around $1,700 amid challenges to US-China trade deal
|- Gold prices gradually recover from the intraday low.
- US President Trump cites an intelligence report suggesting China’s mishandling of virus outbreak, threatens to end the trade deal.
- Concerns surrounding additional stimulus from the US, New Zealand act as the latest catalysts.
- A light economic calendar keeps virus/trade headlines on the driver’s seat.
Gold prices failed to extend the uptick beyond $1,700 while taking rounds at $1,698, down 0.10% on a day, in early Monday’s trading. It should be noted that the bullion slipped to $1,692.30 during the early-Asian session amid broad risk-off sentiment.
While good news from Gilead seems to have eased the coronavirus (COVID-19) fears at the start of the week, the Trump administration’s criticism of China’s mishandling of the virus outbreak weighed on the risk tone.
Having earlier said to cheer his allegations over the dragon nation, backed by the intelligence report, US President Donald Trump recently threatened to end the trade deal with China if it fails to purchase US goods.
Although China terms the accusations as a bluff to fool the US voters, US S&P 500 Futures drop over 1.0% to 2,792 by the press time.
The recent catalysts for financial markets are in the form of hints suggesting additional stimulus from the US, not to forget the downbeat survey from the Australian Bureau of Statistics (ABS).
It should, however, be noted that the absence of Chinese and Japanese traders seems to restrict the yellow metal’s reaction to the risk-off sentiment.
Looking forward, traders will need to keep eyes on the US-China trade/virus updates for near-term direction.
Technical analysis
An upside clearance of 100 and 200-HMAs, respectively near $1,702 and $1,708, becomes necessary for the escalation of the recent recovery moves towards short-term resistance line, at $1,717 now. On the downside, 61.8% Fibonacci retracement of April 21-23 upside, near $1,691 and Friday’s low near $1,670 could lure the bears.
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