- US-China trade war fears continue to benefit Gold safe-haven status.
- Dovish Fed expectations, subdued USD demand remained supportive.
- Seems all set to end the week on a high note near multi-year tops.
Gold extended its sideways consolidative price action on Friday and remained confined well within a narrow trading band near multi-year tops, around the key $1500 psychological mark.
Looks to trade, rising Fed rate cut bets
The new US tariffs on the remaining $300 billion worth of Chinese goods announced last week revived fears of a full-blown trade war between the world’s two largest economies and benefitted the precious metal’s perceived safe-haven status. The global flight to safety helped the commodity to quickly reverse the post-FOMC dip to the $1400 mark and finally breakthrough a near-term trading range earlier this week.
The positive momentum got an additional boost amid speculation that the US Federal Reserve will have to cut rates further if the ongoing US-China trade war worsens further, which tends to underpin demand for the non-yielding yellow metal. However, extremely overbought conditions held investors from placing aggressive bullish bets and led to a range-bound trading action over the past two trading session.
Meanwhile, a negative trading sentiment around global equity markets triggered some renewed weakness in the US Treasury bond yields. This coupled with the US President Donald Trump’s latest criticism about the Fed’s monetary policy stance kept the US Dollar bulls on the defensive, which might continue to extend some support to the dollar-denominated commodity and help limit any meaningful corrective pullback.
Moving ahead, Friday’s US economic docket – featuring the release of Producer Price Index (PPI) – will be looked upon for some short-term trading opportunities later during the early North-American session. Nevertheless, Gold remains on track to record strong gains for the second consecutive week and post its highest weekly close since late-March 2013.
Technical levels to watch
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