· Gold prices rose on Monday as fears of a protracted U.S.-China trade war hurt risk sentiment, while poor economic data from the United States bolstered bets of a U.S. Federal Reserve rate cut.
Spot gold edged up 0.2% to $1,286.89 per ounce as of 0129 GMT, rising for a third session in a row.
U.S. gold futures also gained 0.2%, to $1,285.50 an ounce.
· “Gold has really reversed earlier losses as risk appetite in the market remains rather shaky,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.
“U.S. sanctions on Huawei and even the rest of the Chinese technology firms have really aggravated trade tensions.”
· China on Friday denounced U.S. Secretary of State Mike Pompeo for fabricating rumors after he said the chief executive of China’s Huawei Technologies was lying about his company’s ties to the Beijing government.
· A string of weak data from the United States late last week stirred up concerns that its protracted trade-war with China has started taking a toll on the country’s economy, and promoted bets for a much expected rate cut by the Federal Reserve.
Over the weekend, U.S. President Donald Trump repeated a complaint that the Federal Reserve’s policies have kept U.S. economic growth from reaching its full potential.
· Further uncertainties emerged after British Prime Minister Theresa May said on Friday she would quit after failing to deliver Brexit, setting up a contest that will install a new British prime minister who could pursue a cleaner break with the European Union.
· “The rise of volatility triggered by geopolitics benefited the yellow metal and if the UK political game of thrones and U.S.-China trade keep uncertainty levels high, gold could once again jump above $1,300,” Alfonso Esparza, senior market analyst at OANDA, said in a note.
· The U.S. dollar was struggling against a basket of six major currencies, having fallen off a two-year peak in the previous session due in part to the U.S.-China trade dispute, making gold cheaper for holders of non-U.S. currencies.
· Meanwhile, hedge funds and money managers sharply reduced their net long positions in COMEX gold in the week to May 21, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
· Gold investors may be frustrated with the precious metal’s listless performance, as the price has been struggled to hold on to recent gains but they are not ready to throw in the towel just yet.
Sentiment remains unequivocally bullish in the short term as both Wall Street analysts and Main Street investors expect to see higher prices in the near term, according Kitco News’ Weekly Gold Survey.
The bullish call comes as gold prices remain trapped in a narrow trading range, with critical support at $1,270 an ounce and strong resistance between $1,295 and $1,300 an ounce.
Bob Haberkorn, senior commodities broker with RJO Futures, the lone gold bear said that the yellow metal will continue to struggle if equity markets can stabilize at current levels.
“I think you have to continue to sell the rallies because they have proven to be short-lived,” he said. “I don’t think gold has bottomed out just yet.”
However, he added that although prices could drop next week, he would not be selling.
“The stock market can turn around as quickly as it bounced off the bottom, while positive movement on the dispute with China is by no means certain,” he said. “The monetary background remains positive for gold.”
· Gold has formed a cup and handle patter on the daily chart and we already saw a breakout of the handle and the breakout of bullish flag in hourly chart. Candlestick pattern confirms Bullish Engulfing pattern on the daily for Gold hence adds additional probabilities to go long long-term with USD will continue to weaken due to US-China trade war especially US has banned Huawei.
· GOLD: while market is trading above support 1275, we have uptrend to resistance level 1303.
· Among other precious metals, silver rose 0.3% to $14.60 per ounce, while palladium fell 0.5% to $1,329.05.
Platinum edged 0.1% higher to $802.63 an ounce.
Reference: Reuters, Trading View, Kitco
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