- Gold prices rose to $1341 before Asian markets open on Wednesday.
- USD weakness and traders’ rush for risk-safety continues to please the Bullion buyers.
- $1349 seem immediate resistance on a successful break above $1341 whereas $1334 can be considered as adjacent support.
Gold surged to a ten-month high of $1341 before Asian session begins on Wednesday. The yellow metal has been favorite of traders since late 2018 when doubts over the Fed’s rate hike emerged amid challenges at global economic front mainly due to the US-China trade tussles. While the world’s two largest economies, namely the US and China, are likely calling peace, there are many other catalysts that keep questioning investor sentiments.
When the doubts over the US Federal Reserve’s rate hike trajectory challenged trade optimism, safe-havens like gold started regaining their allure during late last year. The trade-war between the US and China that saw huge tariffs on each other’s products and a reduction in demand due to that in rest of the world, coupled with Brexit and EU political crisis, were also some of the reason that played their role in Gold’s upside.
In particular, to Tuesday’s rally, the US Dollar’s decline can be considered as a major reason for the Bullion’s upside. The greenback weakened after Cleveland Fed President Loretta Mester, generally considered a policy hawk, shifted her outlook for balance sheet alteration and rate-hike to a bit softer pace, as per the Reuters reports. Adding to the greenback weakness was investors’ cautious attitude ahead of the US-China trade talks resume on February 20-21 in Washington when China’s Vice Premier Liu He arrives in the US to negotiate the deal further.
Other than the USD weakness, on-going uncertainties surrounding Brexit and eco-political challenges at the EU also contributed towards the Gold’s recent rise.
With most of the aforementioned catalysts continue to remain present and are less likely to offer any solution soon, chances of the growing market pessimism to please Gold bulls can’t be denied at least for now.
Gold: Technical Analysis
Considering the overbought position of the 14-day relative strength index (RSI), the Gold prices may witness pullback towards $1334 and $1328 if it fails to successfully surpass $1341.
In case the quote rallies beyond $1341, $1349, $1356 and $1360 are likely following numbers to appear on the bulls’ radar to target.
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