Gold retains a bullish bias while above $1,275

  • Gold prices have been trading between $1,292.93oz and $1,310.35oz and at the time of writing trade at $1,296.50oz spot. 
  • Politics and global economic growth are key in determining gold's fate. 

Gold prices fell overnight from their highest placement since the month's peak at $1,314.13oz, breaking below the psychological $1,300 level as the greenback stepped on the peddle again, recovering from the 96.47 lows in the DXY and traded as high as 96.82. However, the global economic and geopolitical current climate is on tenterhooks and the state of unease should remain favourable to precious metals. 

"We continue to expect the yellow metal to have an asymmetric reaction to disappointing data releases, which provides a constructive backdrop for gold prices to firm as macroeconomic data deteriorates,"

analysts at TD Securities argued. 

On the economic front, the analysts at TD Securities note that the disappointing industrial production in China, along with an increase in the unemployment rate, continued to highlight that demand from the world's largest consumer may be on the wane. "We reiterate that our proprietary real-time demand growth indicator is pointing towards further deterioration in the near-term. With global momentum trends still on the wane, delays for the highly anticipated Trump-Xi meeting, along with comments from trade negotiators which still suggest that the Administration has yet to waver on their intent to include enforcement clauses."

Gold levels

From a techncial perspective, we are seeing support and ascending channel information from the 1280 lows. While the price may have dropped below 1300, ATR and momentum indicators suggest the downside is overdone. While trading above 1275, on the way up, bulls can target 1315 as the next key target that meets the trend-line prior support of the rising channel. 1332 guards the 2019 highs as being the 19th Feb high of $1,345.19/oz. On a break below 1275, the focus will flip back to the towards to 1250, a key confluence area made up of Fibos and prior support and resistance.

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