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  • China plans  to lift penalties on intellectual property, a negative for gold bugs.  
  • Gold is supported at a key technical Fibo level.  

Spot gold is steady in Tokyo, unchanged on the day within a $1 range around 1453 at the time of writing. Markets are quiet and soaking up the record closing highs on Wall Street, as well as yesterday regional equity sentiment that was quite positive, led by Hong Kong’s 1.6% bounce, as investors cheer mergers as well as upbeat trade deal headlines.  

  • Wall Street close: Benchmarks set fresh record closes on upbeat trade headlines

The risk-on sentiment  was the name of the game overnight which has lent a hand to the bearish case for gold. The price travelled from $1,462 overnight as the US dollar picked up a bid with a wobble in the euro following less than encouraging IFO index numbers that showed business conditions consolidating around their lows. However, the bullish equity mood had little apparent impact on government bonds, with very small net changes on the day in Europe and North America. US two-year  treasury yields round-tripped from 1.62% to 1.64% to 1.62%, while ten-year  yields pushed up to 1.79% but then rolled over to 1.76%.

China is planning to lift penalties on intellectual property violations

Meanwhile, Sino/US trade deal negotiations are indeed the  core geopolitical fundamental driver and a series of upbeat headlines have helped to lift risk appetite at the start of this week which is a negative for gold prices. The major headline came with the reports that China is planning to lift penalties on intellectual property violations bolstered trade optimism.

Gold levels

The price is barricaded by the recent low, a 78.6% Fibonacci of the 12th Nov swing lows and recent highs  and the 21-hour moving average to the upside. Upside targets are the 21st Nov lows that meet the 38.2% Fibonacci of the 20th Nov swing high to recent lows at 1463 which guards a run to the 21-DMA and the 61.8% Fibonacci of 1469. The 50-DMA is located at 1479 ad recent aforementioned swing highs. To the downside, the 200-DMA comes in at 1420 below 1445 12th Nov swing lows.