- The positive news over US-China trade war and a strong US Dollar both keep gold under pressure on Monday.
- Gold is capped at the 1290.00 level in the American session.
Gold is trading at around $1288.55 a troy ounce on Monday.
In Asia, gold fell from the 1292.00 area to find an intraday floor at 1281.70 in early Europe. The metal then rebounded and is trading now in the 1288.00 area.
Both positive news on trade and a strong US Dollar keep gold on the back foot on Monday.
On Saturday, the US and China had constructive talks over the trade war dispute. Steven Mnuchin, US Treasury Secretary’s recent positive comments saw the markets enter in the risk-on mood on Monday. As gold is seen as a safe-haven asset, investors sold the metal in favor of more risky assets such as stocks.
Indeed, Mnuchin said: “we are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,”
It has also been reported that China would import more agricultural commodities and energy from the US in order to narrow the $335 billion annual US goods and services trade deficit with China.
Both countries agreed that reaching a consensus was of mutual benefit for both parties. “China has never hoped for any tensions between China and the United States, in the trade or other areas,” said Chinese foreign ministry spokesman, Lu Kang while Vice Premier Liu He said the talks were “positive, pragmatic, constructive and productive”.
Goldman Sachs analysts argue that “we do not rule out the possibility that the Chinese team offered some tangible concessions which helped the progress of the talks, but as other aspects of an agreement are still in flux, has avoided stating these offers in public,” as the Bank wrote in a research note.
Meanwhile, the US Dollar Index (DXY) which is largely inversely correlated to gold has found an intraday floor at 93.66 and is still trading at multi-week high.
Gold 4-hour chart
The main trend is bearish as the market is trading below its 50, 100 and 200-period simple moving averages on the 4-hour chart. Supports are seen at the 1281.70 swing low and at 1270.00 figure while resistances are seen at the1290.00 psychological level 1296.92 and at 1300.00 figure.
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