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  • Gold remains on the back foot despite US-China trade war and geopolitical tension concerning the Middle East and Hong Kong.
  • The US Dollar (USD) takes the rounds to multi-year high despite the US markets’ off.

Gold prices seem to ignore the US-China trade war concerns, not to speak of Hong Kong protests and tension surrounding the Middle East, as it takes rounds to $1,525 during early Monday.

The yellow metal pulls back from multi-year highs as the USD, that generally as an inverse relationship with the bullion, seesaws around late-2017 highs. Markets shrug-off the US President Donald Trump’s repeated push to ease the monetary policy to the Federal Reserve amid not so dovish comments from the Fed policymakers. Adding to the US currency strength could be the latest downbeat comments from the European Central Bank (ECB) officials.

At the geopolitical front, Hong Kong crisis is worsening and the latest reports from China signal military intervention, which the US doesn’t like, ahead of holding a press conference on Tuesday. Further, Russia recently blamed the US of breaking the ceasefire in Syria while Iran unveiled latest drone missiles to showcase its readiness to confront the US.

Coming back to the US-China trade scenario, the Trump administration doesn’t want to step back from its tariffs despite China stepping back from previous retaliation. Both the nations are scheduled to meet for trade negotiations during this month though no breakthrough is expected to roll out.

It should also be noted that China’s August month Caixin Manufacturing Purchasing Managers’ Index (PMI) surged to five-month high with 50.4 mark, beating 49.8 expectations, but the official gauge kept being in the contraction region with 49.5 reading.

Moving on, the US markets are closed for the day but month-start PMI readings are there for publishing while trade/political headlines can also offer intermediate trade opportunities.

Technical Analysis

FXStreet Analyst, Ross J. Burland, spots sustained correction towards 50% mean reversion target with $1,558 acting as immediate key resistance:

The price of  gold  is moving lower in a sustained correction towards a 50% mean reversion target that comes in at 1478, albeit with some way to go and support in the 20-day moving average at 1512 ahead of 1419. The 50% mean reversion target comes in at a level of support from  the 13 Aug  volatility  and drop. A 61.8% retracement would then be located at 1,460 ahead of the 19 July swing highs at 1,452.93. On the upside,  bulls can look to1,558 as a means to  open 1,590 as the 127.2% Fibo target area. Thereafter, bulls can target the 78.6% Fibo of 2011 to YTD range located in the 1,730s ahead of the triple-top peaks of the 1,800s.