- Positive news reports surrounding the US-China trade deal and Brexit are still far from the final solution.
- Developments from the Washington meeting between the US and China, together with the US data, can highlight immediate trade direction.
Following its recovery from $1285, Gold prices seesaw near $1292 during early Wednesday. The yellow metal previously took advantage of market risk-on as early-week optimism surrounding the global growth faded. However, recent positive news reports concerning Brexit and the US-China trade deal are likely challenging risk-aversion.
Sluggish data from the US, an understatement to growth prospects by the RBA and renewed Brexit uncertainty confined previous positive sentiment based on welcome macro and signals favoring the US-China trade deal.
Though, the optimists couldn’t last long as weaker than expected prints of the US data and another rejection of Brexit proposals in the UK parliament supported the bullion on yesterday.
10-year treasury yield of the US bonds recently gained 1.6 basis points to 2.495%.
During Wednesday, investors took a breather at the day start on positive headlines from the Brexit but the Financial Times’ report indicating both the US and China reaching closer to a trade deal boosted buying as China is among the largest gold consumer.
Despite the latest positive news reports, looming uncertainty over the US-China trade deal and Brexit can continue limiting the precious metal’s upside. Hence, developments surrounding such risk events should be observed closely. It should also be noted that the Chinese delegation led by Vice Premier Liu He is at the negotiating table with their US counterparts in Washington for two days starting from Wednesday.
The US ADP employment change and the ISM non-manufacturing PMI could also offer intermediate moves to Gold prices. February month ADP employment change could soften to 170K from 183K prior whereas ISM sentiment gauge could decline to 58.0 from 59.7 in March.
Gold Technical Analysis
100-day SMA level of $1281, followed by $1277/76 support-zone comprising January month lows, can limit the immediate downside of the yellow metal.
$1300 and 50-day SMA level of $1309 may restrict short-term upside ahead of shifting market attention to six-week-old descending trend-line near $1318.
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