Gold Price Analysis: XAU/USD bulls fight back control as US-China row escalates, eyes $1740
- Gold bulls extend control above 1730 levels.
- Flight to safety amid escalation in US-China tensions boosts gold.
- Gold on track for a weekly decline, despite hitting 7-year tops.
The recovery in Gold prices (XAU/USD) from Thursday’s troughs of 1717.34 regained traction above the 1730 mark in European trading, following a brief consolidative stint in Asia.
The fresh leg higher in the yellow metal is mainly driven by the European traders’ reaction to the escalation in the US-China tensions, in the face of Beijing taking ‘forceful measures’ on Hong Kong under the National Security bill.
The deepening concerns prompted a fresh flight to safety wave and lifted the ultimate safe-haven back on the 1730 barrier. The spot now trades with 0.44% gains at 1735.56, although remains on track to book a weekly loss.
The weekly decline could be likely associated with the increased expectations of a global economic upturn, as some countries relaxed lockdown restrictions. Meanwhile, the US dollar continued to draw the haven demand on the back of the US-China row and fading optimism over the anti-coronavirus vaccine that weighed heavily on the global stocks.
Looking ahead, the US dollar price action and risk trends will continue to influence the gold trades while the near-term sentiment around the metal will likely remain underpinned by the massive stimulus announced globally to combat the virus impact.
Gold: Technical levels to watch
With the renewed uptick, the next resistances are aligned at 1740 (round number), 1749.14 (May 21 high) and 1765.38 (7-year high). To the downside, immediate support is seen at 1716.31 (21-DMA). A break below which the 1700 mark will be tested.
Gold: Additional levels
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
