- Gold gains traction of the third consecutive session on Friday amid worsening US-China relations.
- The positive momentum broke through a near two-week-old resistance near the $1722-24 region.
- Friday’s key focus will remain on Trump’s news conference on China’s security law for Hong Kong.
Gold edged higher during the early European session and climbed back closer to the previous day's swing high, around the $1727 region.
The precious metal gained some positive traction for the third consecutive session on Friday and was being supported by escalating diplomatic tensions between the United States and China. It is worth reporting that China's parliament on Thursday approved a national security law for Hong Kong, which further fueled worries about a standoff between the world's two biggest economies.
The development dented investors' appetite for riskier assets and the same was evident from a weaker trading sentiment around the equity markets. This, in turn, boosted demand for traditional safe-haven assets, including gold. The move-up was further supported by the prevalent US dollar selling bias, which tends to underpin the dollar-denominated commodity.
The USD remained depressed on the back of Thursday's dismal US Q1 GDP print, which came in to show that the economy contracted by 5% annualized pace as compared to 4.8% estimated earlier. This coupled with a fresh leg down in the US Treasury bond yields further held the USD bulls on the defensive and provided an additional boost to the non-yielding yellow metal.
Meanwhile, the latest leg of a sudden spike lifted the commodity beyond the $1722-24 resistance zone, marked by a near two-week-old descending trend-line extending from multi-year tops. Hence, some follow-through positive move, towards testing the $1735 horizontal resistance, now looks a distinct possibility.
However, traders might refrain from placing any aggressive bullish bets ahead of the US President Donald Trump's news conference later this Friday. Trump's reaction to China's move to tighten control over the city of Hong Kong will now play a key role in determining the commodity's next leg of a directional move.
Technical levels to watch
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