Gold: $1315 gains market focus amid global political uncertainty

Gold trades near $1313 during early Friday.
Increasing risks emanating from Brexit, the US-China trade negotiation and the US government shutdown have contributed towards an upside recently.
$1315 seem immediate resistances with $1306.50 acting as nearby support.

Anil Panchal FXStreet

Gold prices remain a shade lower to the $1313 ahead of the London market opens on Friday. The bullion increased Thursday as doubts over Brexit as well as a trade accord between the US and China joined hands with weaker US retail sales. For now, developments from the US-China negotiations in Beijing and the US President Donald Trump’s reaction to the latest bill up for avoiding a government shutdown will be closely observed.

The UK PM Theresa May got another humiliating defeat in the British Parliament on Thursday as amendments relating to fresh Brexit plan got rejected. After the votes, chances of the UK crashing out of EU without any deal increased as an amendment to delay Article 50 was also rejected by members of the parliament (MPs).

On the other hand, the US delegates in China are making less progress towards a trade accord between the world’s two largest economies, as reported by the South China Morning Post.

Additionally, members of House of Commons passed the bill that bears an alternative to Trump’s Mexican border wall and sent it for President’s signature to become a law.

While uncertainty concerning Brexit, US-China deal and the US government shutdown triggered risk aversion, the decline in the US retail sales figures to -1.2% versus +0.1% consensus and core retail sales to -1.8% against no change expectations also contributed towards the Gold’s moves.

The US delegates including Treasury Secretary Steve Mnuchin and the trade representative Robert Lighthizer are to hold a second round of talks with their Chinese counterparts in order to come up with any progress that can please both the national leaders. As per recent news from the CNN, White House said that Trump may give a 60-day extension to China after March 01 deadline for the new tariffs. Hence, the US leader is now in the process to please China to accept his hard demand over IPR and structural reforms.

Moving on to the government shutdown issues, Reuters reported that Donald Trump will deliver his remarks on border security around 15:00 GMT. CNN earlier said that Trump is now planning to declare a national emergency and raise $8 billion to build a wall surrounding Mexico.

With political plays concerning the US and the UK challenging global market optimism, investors rush to gold in search of risk safety.

Gold: Technical Analysis

The precious metal prices have been struggling to clear $1315 on a daily closing basis since early last week, making it the favorite for buyers. Should the quote cross $1315, $1318 and $1322 can entertain short-term Bulls before challenging them with $1327.

On the flipside, an ascending trend-line connecting low marked since late November, at $1306.50, seems strong support, as a break of which can drag prices to the $1302 and then to $1296 rest-points.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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