- Gold is barely responding to the latest spanner in the works for trade deal progress.
- Traders wait to see how China reacts to the signing of the Hong Kong bill.
- Bulls need a close beyond the 21st Nov lows that meet a 38.2% Fibonacci key level.
Gold has popped a few bucks on the news that US President Trump has said signed the Honk Kong bill and subsequently said, "I signed these bills out of respect for President Xi, China, and the people of Hong Kong. " Gold rallied $3.46c/oz on the news to test its 50-hour moving average. Markets have been unusually desensitised to trade headlines in recent sessions, despite conflicting headlines and themes.
This news, in particular, should be igniting a risk-off surge, but so far, the immediate reaction has been relatively subdued. Gold remains in bearish territory, AUD is off just 0.17% at the time of writing, (albeit marking fresh lows, the lowest since mid-October) while the yen is down only 20 pips vs the greenback.
How will China react?
China warned the US that should Trump sign the bill, it would be a gross interference in the nation's affairs and a violation of international law and threatened to retaliate. Subsequently, the implications could be a freeze on trade talks all together - watch this space and for how China reacts. Following the signing of the bill, Trump said 'they are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all".
However, we may need to wait until next week's open for all of this to digest and be fully consumed by the markets considering that North America will be out on holidays. US stocks and the US bond market will be closed on Thursday in observance of Thanksgiving. On Friday, the New York Stock Exchange and the Nasdaq will resume normal trading hours but will close early at 1 p.m. ET.
Gold levels
Testing the 50-hour moving average here, bulls need a close beyond the 21st Nov lows that meet the 38.2% Fibonacci of the 20th Nov swing-high to recent lows at 1463, a level that guards a run to the 21-DMA and the 61.8% Fibonacci of 1469. The 50-DMA is located at 1479 ad recent aforementioned swing highs. The 200-DMA comes in at 1420 below 1445 12th Nov swing lows.
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