Gold bounces off $1382 on fresh risk off moves
- The US side silence on Huawei, likely fresh tariffs on EU goods and the US-Iran tension renew risk sentiment.
- The political news to dominate market momentum amid lack of economic data.
With the USTR’s latest proposal to levy fresh tariffs on EU goods joining uncertainty surrounding Huawei’s future after the US-China trade truce, Gold prices recover to $1390.35 during early Tuesday.
The US Trade Representative’s office proposed fresh tariffs on EU’s $4 billion worth of goods over the region’s aviation subsidies.
Despite latest trade ceasefire between the US and China, the embattled Huawei is still to receive directions from the US Commerce Department and the same can renew tensions amid the world’s two largest economies.
In addition to trade risk, the US and Iran tussle also gain market attention after the US President Donald Trump recently said that Iran is playing with fire while challenging them. Furthermore, the US White House conveyed the news report that the President Trump spoke with his French counterpart about Iran increasing low-enriched Uranium’s inventory than permitted by the nuclear deal.
As a result, the risk tone remains heavy after recovering on Monday. The US 10-year treasury yields drop nearly 2 basis points to 2.015% by the press time.
On the economic calendar, Reserve Bank of Australia’s (RBA) likely rate cut seems the only major event for the day, which in turn highlights the importance of global political headlines to direct near-term risk sentiment.
Technical Analysis
FXStreet Analyst, Ross J Burland, expects the yellow metal to continue its extending latest pullback towards 20-D EMA and then to the 50% retracement:
The price of the yellow metal has faced a battering of long Dollars following the weekend's news and trade cease-fire. This has taken the precious metal off multi-week highs and throws a monkey-wrench in the works for the bulls. Bears can now target the 20-D EMA and then the 50% retracement of the April swing lows to late June swing highs around 1350. First, the 13 July 16 highs around the 38.2% retracement need to give. This is located at 1375. 1398/00 and 27 June spike low is a likely resistance on an upside correction.
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.
