Gold prices rose in early Wednesday trading, reaching a one-week high near $3,050. The precious metal's gains can be attributed to increasing turbulence in equity markets, which is suppressing risk appetite and prompting a shift towards havens, as well as an overnight weakening of the US dollar. The latter continues to benefit gold due to the inverse correlation between the two assets. The volatility seen so far this week is unlikely to subside in the near term. With a trade war between the world's two largest economies — one that could yet draw in other nations who haven't yet responded to the US's unilateral imposition of levies — it's difficult to foresee a positive resolution or predict possible outcomes. These are uncharted waters, and traders will be quick to act as headlines continue to drive sentiment. Against this backdrop, and with the Federal Reserve increasingly cornered as recession fears in the US mount — and now expected to deliver four quarter-point rate cuts — demand for the haven appeal of gold is likely to remain elevated. From a technical standpoint, the next key resistance level is around $3,055. A break above this could pave the way for a move towards $3,100.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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