Global trade optimism dents safe haven appeal
A weekly market summary for gold, Oct 7-10
SIGNS of progress in US-China trade talks have led to an improvement in global risk appetites. Heightened market optimism for a temporary trade truce between the world's two largest economies dented safe haven appeal as investors pivoted towards interest-bearing assets. A positive outcome from Sino-US trade negotiations will alleviate risk-off sentiments as markets ease up on global recessionary fears.
The precious metal, though facing considerable headwinds from positive market happenings, will remain supported over shaky economic fundamentals and geopolitical uncertainties in the longer term.
What should investors look out for in the longer term?
A broad-based global economic slowdown will keep global risk appetites measured for the current term. Looming geopolitical uncertainties arising from Brexit concerns, Hong Kong protests along with Middle Eastern tensions will keep investors vested within safe haven assets.
Financial markets have continued to price for a 25bps reduction in US borrowing costs come the next FOMC meeting (Oct 29-30). Gold prices, though stuck within range-bound conditions, look poised to trade positive over accommodative monetary policies by global central banks.
Technical Analysis for Spot Gold (XAUUSD)
The precious metal continues to illustrate bearish bias as market bulls struggle to hold gains above the key psychological level of US$1,500.00. Failure to sustain above the key technical level (US$1,500.00) will spur strong negative influences as market bears pressure gold prices towards key trend line support of US$1,480.00.
A break beneath the key support level will see price levels slide further south towards US$1,455.00 for the near term. Gold prices must break above key resistance level of US$1,510.00 for a resumption of the main bullish trend scenario (US$1,425.00).
Weekly Market Assessment: Range-Bound Key Resistance Level (1): US$1,525.00 Key Resistance Level (2): US$1,510.00 Key Support Level (1): US$1,492.00 Key Support Level (2): US$1,480.00
