Gold struggles to find direction, moves sideways below $1300
FXStreet News

Gold struggles to find direction, moves sideways below $1300

  • Precious metal remains stuck in tight $5 range.
  • USD strength is offset by risk aversion.
  • US markets are closed due to  memorial day.

Although the XAU/USD pair was able to finish the previous week a little above the critical $1300 psychological level, it failed to hold there following a bearish gap as markets returned to action on Monday. Since the early trading hours of the Asian session, the ounce of precious metal traded between $1300 and $1295 and was last seen trading at $1298, where it was down $3.5, or 0.3%, on the day.

Political jitters in Italy continues to push investors to safer assets. After rising more than 20 basis points, the 10-year Italian T-bond yield refreshed its multi-year high above 2.7% while  the FTSE MIB equity index dropped more than 2.5% as the latest developments point to a new election at the end of the summer. However, despite gold’s safe-haven status, the pair is having a rough time gaining traction with the FX interest shifting to the  buck. The US Dollar Index, which was able to advance to a new 2018 peak at 94.44 in the last hour, is now up 0.15% at 94.35.

On the other hand, the latest news from the Korean peninsula suggests that the highly-anticipated  Trump-Kim summit is likely to happen on the pre-set date of June 12, which could be seen as another reason why the safe-haven demand is having the anticipated impact on the market action. The pair could extend its consolidation into the next day as American traders enjoy the long memorial day weekend.

Technical levels to consider

A daily close above $1300 (psychological level) could allow the pair to advance to $1308, where the crucial 200-DMA is located. A clear break above that level could bring in more buyers and lift the pair to the next short-term target of $1320 (20-DMA). On the downside, $1295 (daily low) aligns as the first interim support ahead of $1287 (May 23 low) and $1281 (May 21 low).

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.