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  • Gold bulls stepping up to challenge downside pressures.
  • DXY losing its  trade appeal, drifting sideways while the euro rallied and yen sold off. 94.70 was as high as the DXY got and it even traded as low as 94.32 at one point.

Gold had been sliding from the $1,203 early bird North American session highs and made a low of $1,196 in the NY afternoon as the price continues to carve out a bullish symmetrical triangle pattern on the charts. The moves of late are associated with the performance in the greenback where traders are buying into cautiously. Fundamentally, the intensifying U.S.-China trade dispute is the driver ahead of next week’s FOMC meeting.  

However, we have only seen modest moves in the greenback so far and markets, in fact, took the trade headlines in their stride. Even with President Donald Trump announcing $200 billion tariffs against China on Monday that provoked an expected and swift retaliation from the nation, fear has yet to really show up in the market and the US benchmarks were higher with the DJIA making another all-time record high.

Bulls left out in the rain

The dollar bulls were subsequently left out in the rain with the DXY drifting sideways while the euro rallied and yen sold off. 94.70 was as high as the DXY got and it even traded as low as 94.32 at one point. In most recent trade, spot gold has scored fresh highs of $1,199.46 as the dollar drifts lower. Eyes will now be on whether China come forward to speak to the US – if they do not, this could well drag on for some time and indeed, with the midterms around the corner, Trump will want to go into those with the upper hand looking strong – so the first move needs to come from China.  

Gold levels

Gold remains in a  sideways consolidation between 1214 and 1182 but is making the case for a break higher according to the bullish symmetrical triangle. For bulls to get back control, whereby the market is heavily short of gold and to reconsider its positioning, (net speculative short positions, or bets an asset’s price will fall, in gold, are up 275% year to date), then they need to get and hold above the 50-D SMA at 1211 first, then 1214 which is resistance and then the 200-W SMA at 1233 will need to be challenged. A retry of the downside now should target 1146/20 monthly levels.

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