Market Analysis

Gold falters as optimism grows over upcoming Sino-U.S trade talks

The value of spot gold has fallen below the $1,500 level for the first time this month, as optimism continues to grow over the upcoming trade negotiations between the United States and China. U.S Treasury Secretary Steve Mnuchin said that both sides have a ‘conceptual’ agreement on enforcing a long-lasting trade deal.

Financial markets took Treasury Secretary Mnuchin’s comments as hawkish, further encouraging investors and traders to move into riskier asset classes. The upcoming trade meeting is set to happen on a ‘vice-ministerial level’, with Chinese negotiators reportedly acting in good-faith and traveling to Washington.

With trade talks set to resume later this month, Treasury Secretary Mnuchin was also keen not to let market expectations race ahead of the realities of the difficult situation that Sino-U.S negotiators still face. Secretary Mnuchin noted that U.S President Donald Trump is happy to walk away from the upcoming trade negotiations and keep the remaining tariffs in place if a mutually beneficial trade deal cannot be agreed this time around.

In general, safe-haven asset classes have had a bad start to the new trading month, as recent bearish sentiment between Beijing and Washington starts to thaw. The Japanese yen has come under pressure, while precious metals such as gold and silver have seen a rapid unwinding of recent technical breakouts.

Gold is now trading well away from its current 2019 trading peak, of $1,559, which the yellow-metal achieved just last week. Gold has seen a stunning rise since late May this year, having gained over twenty percent in value. Since the start of the year, gold has gained over fifteen percent in value.


Gold Daily Candlestick Chart| Source: ActivTrader

Gold Daily Candlestick Chart| Source: ActivTrader


From a technical perspective, gold now faces key rising trendline support from the $1,490 level and its 50-day moving average, around the $1,465 level. To the upside, key technical resistance is located at the $1,520 and $1,550 levels, with the $1,559 level the main technical barrier before the $1,580 level.


Written by Nathan Batchelor, External Analyst, ActivTrades

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