- Gold prices are steady in early Asia although if the dollar continues its northerly trajectory, Friday’s fractal high could come under pressure again.
- Currently, gold is trading at $1,328/oz vs a high of $1,329/oz and a low of $1,326/oz.
Gold prices were trading mostly higher on Friday and futures settled higher as the dollar weakened. The yellow metal booked its second straight weekly gain, a day after the metal’s largest one-day drop since August. Spot gold ended at 1327 while the contract for April delivery on Comex added $5, or 0.4%, to end at $1,332.80/oz.
Gold prices are sensitive to the value in the greenback which is currently looking to base its self down at 96.20 with upside efforts from there so far stalling at the neckline of the H&S pattern in the DXY, located ay 96.60, (besides a pop to 96.72 the high).
Trade talks have been a key feature in the markets and US equities rose further to end the week amid optimism a US-China trade deal would be struck and more dovish Fed commentary which appeared to weigh on the greenback and subsequently support the yellow metal. The Chinese trade delegation said it would remain in Washington, DC past Friday to continue talks and a source familiar with the talks – via Twitter sai that the U.S. and Chinese trade negotiators have been discussing commodities, enforcement and tariffs on Sunday after making good progress on structural issues on Saturday.
In more recent wires, we got the news from Trump Via Twitter as follows:
I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”
Fed front and interest rates
the prepared text of Fed chairman Powell’s semi-annual testimony reiterated recent commentary, with little market impact. We will have that testimony on Tue and Wed this week.
Meanwhile, as analysts at Westpac noted, “there were plenty of Fed comments from FOMC members at a monetary policy forum on Friday, mostly with a dovish tone. Bostic said policy is at a crossroads, Williams was worried about the persistent undershoot of its 2% inflation target, Daly said cyclical inflation pressures are not apparent, Clarida said neutral interest rates appear to have fallen in the US and abroad, and Quarles preferred to maintain ample reserves in its balance sheet.”
In response to the dovish Fedspeak, as far as rates went, the US 10yr treasury yield dropped from 2.68% to 2.65%, while the 2yr yield fell from 2.52% to 2.49%. Looking ahead, the futures markets continued to price only a slight chance of any further Fed rate hikes in this cycle.
Gold levels
Technically, the price of gold is changing hands between the 50% and 23.6% Fibo retracements of the recent swing high and Thursday’s sell-off low with indicators neutral. The divergence in the RSI should be a warning to the bulls tough. Below the 50% fibo retracement of the 14th Feb swing lows to recent double top highs, risk will be to the 61.8% Fibo of the same move at 1319 with the confluence of the 13th Feb spike fractal high.
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