Gold whipsaws over strong recovery in risk assets
A weekly market summary for gold, May 13-17
AN ESCALATION in the Sino-US trade dispute kept safe haven demand firm early week as Beijing hit back with US$60 billion worth of tariffs on the United States. The precious metal struggled to retain bullish gains, however, as risk sentiments illustrated a sharp turnaround over robust US corporate earnings (Q1 2019). A rebound in the US dollar extended further pressure on the yellow metal as investors pivot towards interest-bearing assets. Safe haven assets though receiving support from US-China trade tensions continues to suffer considerable headwinds over strong risk appetites for the current term.
What should investors look out for in the longer term?
Strong risk appetites remain a primary impediment for higher gold prices in Q2. Positive US economic releases have bolstered greenback strength whilst curbing safe haven demand for the current term. The precious metal, though experiencing solid resistance from risk-on sentiments, will remain supported over looming market uncertainties for the coming term. Existing US-China trade tensions along with prolonged weakness in Chinese economic data will bolster bullion appeal as investors grapple with a frail economic backdrop. Safe haven assets will stand tall amidst growing market risks and increasing geopolitical uncertainties in the coming term.
Technical analysis for Spot Gold (XAUUSD)
Gold prices pulled back from a 5-week high amidst severe headwinds at key resistance level of US$1,302.00 (61.8 per cent Fibonacci Retracement Level). Market bulls floundered at US$1,302.00 thereby triggering sharp bearish activities for the precious metal. The appearance of a doji candlestick on the weekly chart will elicit strong negative biases for the current term. A continuation of the negative trend scenario will see gold prices revisit the key trend line support of US$1,276.00 and US$1,265.00 next week.
Weekly Market Assessment: Mildly Bearish Key Resistance Level (1) : 1,288.00 Key Resistance Level (2) : 1,302.00 Key Support Level (1) : 1,276.00 Key Support Level (2) : 1,265.00
