Gold picks up as market sentiment sours
- XAU/USD returns to $1,712 and turns positive on the day.
- Gold prices pick up on concerns about US-China tensions.
- Trump threat to China dampens hopes of a quick economic recovery.
XAU/USD has bounced up from two-week lows sub $1700 on Wednesday and is turning positive on the daily charts. The precious metal has reached $1,712 area, appreciating about $15 during the US session as market risk appetite faltered after US President Trump stirred the already delicate US-China relationship.
Gold appreciates as US-China tensions escalate
US President Trump announced that the US is working on a strong response to China’s security bill for Hong Kong, which has dampened investors’ optimism about a quick post-COVID-19 recovery.
The market has reacted negatively to Trump’s latest threat to China, concerned about the possibility of a new set of tariffs that would hamper global growth. Investors have returned to the safe-haven gold which had lost more than 2% over the previous sessions as businesses started to open following pandemic restrictions and a moderate improvement on macroeconomic data triggered hopes of economic recovery.
XAU/USD picking up from $1,690 support
Gold’s reversal has been contained at $1,695 (May 11 low). On the daily chart, the pair remains moderately positive, trading on an upward trending support line, above the main moving averages.
On the upside, immediate resistance lies at $1,735/45 (May 22, 26 highs) and above there, $1,765 (May 18 high) and $1,780 (Oct 2012 high). On the downside, below the mentioned $1,695, next support levels are $1,661 (April 20 low) and $1,615 (April 18 high).
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
