• Gold erased nearly $20 this week pressured by risk-on flows.
  • Reports of a partial United States (US)-China trade deal boosted the risk appetite.
  • Markets also seem to be pricing heightened hopes of a Brexit deal.

The troy ounce of the precious metal lost nearly $20 this week as it struggled to find demand as a safe-haven. As of writing, the XAU/USD pair was trading at $1,484, erasing 0.6%, or $9, on a daily basis.

A partial trade deal?

Risk-perception this week remained as the primary driver of the market action. Reports of the United States and China reaching a partial trade deal on Thursday allowed the US Treasury bond yields and global equity indexes rally higher. Although there was no official confirmation of a deal at the time of press, citing sources familiar with talks, Reuters reported that the agreement includes a currency pact and a delay in US tariffs on Chinese goods that were initially planned to go into effect next Tuesday, October 15th.

Brexit optimism

Additionally, heightened hopes of the United Kingdom (UK) and the Europan Union (EU) reaching a Brexit deal ahead of the deadline put additional weight on gold's shoulders. European Council President Donald Tusk on Friday said that he received optimist messages that a deal on Brexit could be reached. 

Furthermore, after briefing the EU 27 on his meeting with British Brexit Secretary Barclay, European Union (EU) Chief Brexit Negotiator Barnier has got the green light from the EU27 for "tunnel negotiations," suggesting that sides will be engaging in intense discussions over the weekend to come up with a deal.

Earlier in the week, the data published by the US Bureau of Labor Statistics (BLS) revealed that the core inflation, as measured by the Consumer Price Index (CPI), stayed unchanged at 2.4% on a yearly basis. In the meantime, the minutes from the Federal Open Market Committee's (FOMC) September 17-18 monetary policy meeting revealed that most policymakers believed that a 25 basis points rate cut was needed citing economic outlook, risk management and inflation objectives. 

Participants will be paying close attention to trade balance data from China to see if the world's second-largest economy is losing momentum. On Friday, retail sales, industrial production, and gross domestic product (GDP) data from China are likely to have an impact on the market sentiment as well. 

Retail sales data from the US and speeches by Federal Reserve officials will also be looked upon for fresh signs regarding the next policy move.

Technical outlook

On the daily chart, the XAU/USD pair is looking to end the week below the 20-day SMA. Additionally, the Relative Strength Index (RSI) on the same chart is edging lower below the 50 mark, suggesting that the bearish momentum is building up in the near-term. 

The pair could face the support at $1,474 (Oct. 11 low) ahead of $1,465 (Sep. 30 low) and $1,455 (Oct. 1 low). On the upside, $1,500 (psychological level/20-day MA) aligns as the initial resistance ahead of $1,516 (Oct. 10 high) and $1,534 (Aug. 13 high).

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.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

GBP/USD jumps om Brexit, Bailey retreats on lockdown

GBP/USD  soared above 1.2850 after BOE’s Governor Bailey said mention to negative rates does not imply use. EU’s Barnier heading to London for informal trade talks. PM Johnson announces new restrictions, but no full lockdown

GBP/USD News

EUR/USD hits six-week lows below 1.1750 amid dollar demand

EUR/USD is trading at the weakest levels in six weeks below 1.1750 amid resurgent US dollar demand despite the upbeat market mood. Concerns over COVID-19 resurgence in Europe continue to weigh on the euro. 

EUR/USD News

Gold remains depressed near $1900 mark

Gold remained depressed for the second consecutive session on Tuesday. The downside remains limited ahead of the Fed Chair Powell’s testimony. The set-up still supports prospects for a slide back to August monthly lows.

Gold News

Crypto market shrinks while Bitcoin grows

Ethereum takes the brunt of the falls and gives market share to Bitcoin. Pause in the falls before looking for key supports at lower prices. Ripple plays dangerously and risks looking for support at the $0.20 level.

Read more

WTI: Trapped between key hourly averages ahead of API data

WTI (futures on NYMEX) consolidates the bounce above the $40 barrier, having regained the 21-hourly Simple Moving Averages (HMA), currently at $39.75.

Oil News

Forex Majors

Cryptocurrencies

Signatures