- Gold pulls back from multi-year tops as the US and China step back from earlier warnings.
- China shows readiness to have a calm discussion with the US.
- The US President Trump’s aide turns down calls that the President is ordering the US companies to exit china.
Having surged to the fresh high since April 2013, Gold declines to the intra-day low of $1,538.50, before taking rounds to $1541.60, by the press time of early Monday.
The yellow metal earlier soared as the US-China trade war headlines triggered the risk aversion wave at the week-start. The US and China both increased tariffs on each other’s goods worth of billions of US Dollars (USD) on late-Friday.
However, latest news from the Wall Street Journal quotes some of the US President Donald Trump’s aides, including White House Economic Adviser Lawrence Kudlow, while saying that the President Trump has no plans to invoke emergency powers and force companies to relocate operations from China, two days after his Friday tweet that they were “hereby ordered” to look for alternative locations.
On the other hand, China’s Vice Premier Liu He also showed readiness, via Reuters, to resolve the trade dispute with the US via calm negotiations. Mr. Liu also said that China resolutely opposes the escalation of the trade war, which is not beneficial for the US or China.
With this, risk sentiment recovered on the hopes of a bit better US-China talks at the September meeting in Washington and the same resulted a pullback in Gold and the Japanese Yen (JPY). However, the US Treasury yields are still near multi-year low, which in turn keeps the downpour restricted.
Investors will now keep an eye over fresh headlines, in addition to the US economic calendar, for fresh impulse.
Technical Analysis
FXStreet Analyst Ross J Burland spots $1535 and $1531 as the key supports during the present upside:
The bulls penetrated above the 1535s and fell just a few bucks short of the 127.2% Fibo target which is located around 1,560, guarding the Oct 2012 highs at 1795. On the downside, the 23.6% Fibo and 38.2% Fibo of the opening rally are located at 1540 and 1531. However, should there be some fundamental switch up, bears can target a 23.6% retracement of the prior rally to 1472 ahead of a 50% mean reversion to 1401.
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