Gold spikes to fresh multi-month tops, near $1330 level

Haresh Menghani FXStreet

• The USD fails to preserve early gains and helped provide a fresh boost.
• The prevalent risk-on mood/US-China trade optimism might cap gains.
• The market focus remains on US-China trade talks/FOMC meeting minutes.

Gold quickly reversed an early dip to $1323 area and turned higher for the fourth consecutive session, hitting near ten-month tops in the last hour.

The US Dollar struggled to preserve/build on the early uptick and extended its recent corrective slide from YTD tops, set last Friday, which was seen as one of the key factors boosting demand for the dollar-denominated commodity and behind the latest leg of a sudden pickup in the last hour.

Despite the positive trigger, bulls might struggle to extend the momentum amid the prevalent risk-on mood and growing optimism over a possible resolution of US-China trade conflicts, which tends to dampen the precious metal's relative safe-haven status.

Hence, the key focus will remain on the higher-level US-China traded negotiations on Thursday, wherein Chinese Vice-Premier Liu He is set to meet US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

Market participants will also look forward to the important release of the latest FOMC meeting minutes on Wednesday, which might provide fresh insights over the central bank's policy outlook for 2019 and help determine the next leg of a directional move for the non-yielding yellow metal.

Technical levels to watch

Immediate resistance is now pegged near the $1331-33 region, above which the commodity is likely to aim towards testing the $1346 supply zone with some intermediate resistance near the $1337-38 area. On the flip side, the $1323-22 region now seems to act as immediate support, which if broken might prompt some long-unwinding trade and accelerate the slide towards $1315-14 horizontal zone.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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