Amid fears of the tariffs war getting worse, gold surged higher earlier in the week and briefly clipped the $3,500 mark. Some profit-taking there and hopeful optimism on US-China relations then led to a retreat, which accelerated to a drop below $3,300 on Wednesday during US trading. But as the dust settles a bit, we're seeing some near-term consolidation in price action at the moment:
As things stand, price is stuck in between its key hourly moving averages. The 100-hour moving average (red line) is helping to limit upside movement while the 200-hour moving average (blue line) is limiting downside movement. That keeps a more neutral near-term bias in gold until one of the above levels give way.
As much as there is an optimistic bounce in risk and the dollar in the past two days, there is still a large amount of uncertainty yet to be resolved in the whole tariffs war. Sure, there are some positive murmurs regarding US-China relations. But are they material enough to lead to stronger de-escalation? Not quite yet.
That might be what is keeping gold buyers interested. Not to mention, strong bids during Asia timing for the most part this week.
In the bigger picture, the latest setback hardly puts a dent in the bullish run in gold so far this year. The precious metal is still up 26% year-to-date. And unless Trump is willing to take a step back in the tariffs war, the underlying demand for gold will be hard to put down for now.
This article was written by Justin Low at www.forexlive.com. Read More Details
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