Gold retreats from multi-year tops, fills weekly bullish gap on positive trade headlines

• Easing US-China trade war fears prompt some long-unwinding trade.
• The downside seems limited ahead of this week’s key US macro data.

Gold extended its intraday pullback from fresh multi-year tops and dropped to fresh session lows in the last hour, filling the weekly bullish gap.
 
The US-China trade tensions escalated further following the US President Donald Trump’s announcement on late Friday to raise existing tariffs on $250 billion worth of Chinese goods to 30% from 25% as of October. This comes on the back of China’s retaliatory tariffs on $75 billion US imports and continued benefitting the precious metal’s safe-haven status.
 
The commodity added to Friday’s strong up-move and opened with a bullish gap at the start of a new trading week. The positive momentum lifted the yellow metal to an intraday high level of $1555 – the highest since April 2013 – albeit started losing steam after China’s Vice Premier Liu He said China is willing to resolve trade issues with the US via claim negotiations.
 
This was followed by Trump’s positive trade-related comments that China called the US negotiators last night and said that they want to come back to the negotiating table. The positive developments led to a sudden turnaround in the global risk sentiment and prompted some long-unwinding trade/profit-taking move around the commodity.
 
Meanwhile, the downside seemed limited, at least for the time being, as investors now look forward to a fresh batch of US economic data this week – including the release of US durable goods orders data later this Monday – for more insights over the impact of intensifying US-China trade war. The incoming US macro data might influence the Fed’s near-term policy outlook and help investors determine the next leg of a directional move for the non-yielding yellow metal.

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