- China is set to impose 5% – 10% tariffs on $60 billion worth of US goods.
- Wall Street starts the day higher despite trade worries.
- US Dollar Index struggles to recover above 94.50.
The initial market reaction to China’s official statement regarding the retaliatory tariffs to be imposed against the U.S. lifted the XAU/USD pair above the $1200 handle. As of writing, the pair was trading at $1202, adding 0.05% on the day.
China said that import tariffs ranging from 5% to 10% on $60 billion worth of American goods will be imposed starting September 24. Although this announcement escalated fears over the trade conflict, major equity indexes started the day on a positive note with the Dow Jones Industrial Average and the S&P 500 both adding 0.3% to reflect a relatively higher appetite for risky assets, which makes it difficult for the precious metal to continue to extend its gains against the buck.
Meanwhile, the US Dollar Index struggles to find direction amid a lack of macroeconomic data releases that could impact the dollar’s price action. At the moment, the DXY is down 0.1% on the day at 94.40.
Technical outlook
On the back of today’s modest rise, the CCI indicator on the daily chart inched closer to 100 mark to suggest that the bullish momentum is starting to gather strength. On the upside, the initial resistance for the pair could be seen at $1204 (50-DMA/daily high) ahead of $1212 (Sep. 13 high) and $1220 (Aug. 3 high). On the downside, supports are located at $1200 (psychological level), $1192 (Sep. 17 low) and $1187 (Sep. 11 low).
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