Gold struggles to hold latest gains despite trade/political tension
|- Gold prices witness profit-booking from mid-2013 tops.
- The US unearthed trade wars, North Korea keeps testing missiles.
- Wait for’ mode active ahead of the US NFP.
Following its run-up to fresh multi-year high, mainly on trade war fears, Gold prices take a U-turn during early Friday while flashing $1,439 on the chart.
The US President Donald Trump’s surprise announcement of a 10% tariffs on China’s $300 billion worth of goods provided ample ammunition to the safe-havens while also dragging the US treasury yields down to multi-month low.
Adding to the fears was North Korea’s another missile test, third in a week’s time, that is likely to weigh on the US-North Korea trade relations as the US await details of future nuclear talks from the hermit kingdom leader Kim Jong-Un.
Recently, President Trump said that “We will be taxing the hell out of China” during a rally in Cincinnati.
A possible reason for the latest profit booking of the bullion could be the markets’ active tension mode ahead of the key US employment data for July month. Even if the Fed keeps praising employment scenario of the world’s largest economy, expected weakness in the headline Nonfarm Payrolls (NFP) to 164K from 224K pushes investors to rethink on their recently curtailed bets on further Fed rate cuts for the year 2019.
Technical Analysis
FXStreet Analyst Flavio Tosti spots 2019 high as the tough nut to crack for buyers while also portraying the bullish momentum suggested through gold’s sustained trading above main moving averages:
The yellow metal bulls will need to break above 1,452.71, 2019 high, in order to travel north towards 1,476.00 resistance. Bulls should ideally keep the price above 1,440.00 in order to reach new 2019 highs. On the flip side, if the 1,440.00 support gets breached, the market could decline towards 1,430.00, 1,420.00 and the 1,414.00 level.
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