Gold: Buyers and sellers jostle around $1496

  • Japan holiday, lack of fresh trade/political headlines keep gold prices in check.
  • Market fears around multi-year highs, overbought technical indicators add to dormancy.

With the global traders awaiting fresh trade/political clues to extend Gold’s previous run-up, the quote takes the rounds to $1496 during early Monday in Asia.

The US and China keep denigrating each other for failed trade relations, dimming prospects of any development in the near future. However, expectations of a September month negotiation between the giants aren’t ruled out and that exerts downside pressure on the safe-havens.

Global central banks like Reserve Bank of New Zealand (RBNZ) and Reserve Bank of India (RBI) surprised markets during last-week by announcing larger than expected rate cuts. Also, Goldman Sachs recently supported the case of the global recession based on increasing trade war between the US and China. Furthermore, geopolitical tension emanating from the Middle East and Brexit also contribute to the rush towards risk-safety.

Though, prices are trading near multi-year highs without much correction since August, which in turn triggers fears of a hard pullback amid overbought conditions of 14-day relative strength index (RSI). Adding to this, Japanese markets are off today and the global economic calendar is also light.

Technical Analysis

FXStreet Analyst Ross J Burland highlights increasing odds for the yellow metal’s gradual declines towards $1,480:

Gold was a strong performer and climbed 3.5% last week although the risk-off trade has lost some momentum as markets come to terms with on-going geopolitical strife. Should there be prospects of a meeting between the US and Chinese trade officials in September, gold can likely continue to give back some ground to the bears on profit-taking and on a break back below the 1480s, a deeper retracement back to the 1430s could play out once the 23.6% Fibo in the 1450s gives.

Bulls will look to the 1528/30s but the price will be expected to hold initial tests. Further out, bulls will look to the 127.2% Fibo target which is located around 1,560, guarding the Oct 2012 highs at 1795. The 1800s arrive as the 2011 highs and the price has touched the 61.8% Fibo retracement of those highs to the late 2015 swing lows.

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