Gold: Upside remains capped near $1310 amid firmer USD
- Gold fails to extend recent moves beyond $1310 on early Friday.
- The US Dollar strength, based on downbeat fundamentals from the Eurozone, the UK, and Australia, restricts the bullion’s upside.
- The $1311.30 seem immediate resistance with $1303 likely acting as adjacent support.
Gold prices trade little changed around $1310 on Friday start. The yellow metal rose Thursday after comments from White House advisor raised doubts over the trade deal between the US and China. While overall market pessimism favors the bullion’s further advances, the recent strength of the US Dollar continues to be the drag worth mentioning.
The White House Adviser Lawrence Kudlow told Fox news on Thursday that 'sizable distance' remains in US-China trade talk. The report dimmed prospects of a successful trade deal between the world’s two largest economies at the end of the 90-day peace period.
In addition to growing uncertainties over the US-China trade deal, fears of global economic slowdown and Brexit also entertains the safe haven traders. The International Monetary Fund (IMF) and the World Economic Forum (WEF) were the first to convey their worries for global economic weakness during the late last month. The same concerns were repeated by major central banks and the European Commission off-late.
With the aforementioned catalysts challenging market’s risk sentiment, investors turn to the safety of risk and prefer gold at the time of uncertainty. However, the recent strength of the US Dollar, based on pessimism surrounding Eurozone, Brexit and the Australian monetary policy moves, challenges the precious metal’s rise.
Given the brighter chances of the safe haven rally on present economic uncertainty, dovish statements from the upcoming testimony of the Fed Chair, the US government shutdown fears and/or disappointment from the US inflation and growth numbers can escalate Gold’s upside.
XAU/USD Technical Analysis
Immediate descending trend-line at $1311.30 seems nearby drag for gold prices with $1316.60, $1323.30 and $1326 acting as following resistances to watch.
Alternatively, $1303, $1300 and the $1297 may entertain sellers in the case of a pullback.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
