Gold prices had undergone a slight correction yesterday. However, the traders disallowed further dips and uplifted the prices.
The critical part was the to-and-fro action through the significant resistance/support level stalled at $1552.36. Such a move shows a keen interest among the trading participants for the yellow metal.
Traders focus on the main highlight of the week – the signing of the Phase 1 agreement. Just a day before this significant event, US Treasury Secretary Steven Mnuchin commented on the ongoing Chinese tariffs.
Secretary Steven mentioned that the tariffs on Chinese goods would continue to stay in effect until the completion of the Phase 2 deal. However, doing so would restrict Chinese access to the world’s second-largest trading market. And, the counterparty would stay disgruntled as they would be unable to enjoy the most out of the Phase 1 deal completion.
Meantime, investors have already started to shift towards the yellow metal, which is considered a safer asset.
“Overnight reports that the U.S. would keep existing tariffs in place at least until after the U.S. election … has obviously rattled markets a bit and that has been somewhat supportive for gold prices,” said ING analyst Warren Patterson.
Interim, the US Dec. Consumer Price Index rose by 0.2% as compared to a 0.3% increase in Nov. The Labor Department also mentioned that CPI had increased by 0.4% in Oct., highlighting the slowing down of CPI data growth over time. Anyhow, the USD Index was slightly moved with this soft US data.
The Stochastic Oscillator was indicating ~58 level momentum, slightly above the 50 level benchmark. Also, the XAU/USD pair remains in the upper region of the Bollinger Bands (BB), suggesting bull trend continuation. However, the Parabolic SAR continued to hover above the trading pair with heads pointing to the south side.
Nevertheless, any potential upward move will immediately activate the Fibonacci levels stalled near $1553.61 (38.2% Fibo. level) and $1575.92 (23.6% Fibo. level).
For the time being, I don’t see any significant weaknesses in the gold prices for a non-stop downfall in the coming sessions, until the breakage of $1517.57 (61.8% Fibo. level).
Here, the XAU/USD pair bulls appeared to peek into the upper portion of the BB, suggesting uptrend reversal. Also, on the 4H chart, the Parabolic SAR has just moved below the trading pair, providing more reversal signals. However, the overall momentum seemed to remain flat as a pancake, hovering near ~67 mark.
On moving further upper side, significant resistances remain stalled near:
Nonetheless, if there happens to be a sudden short-term decline in the prices, then immediate support would be found near $1537.74.