During the past couple of days, gold has traded exactly in line with our forecast “Gold Bullish Channel Violates – Safe Haven Appeal Takeovers” to continue it’s a bullish trend to hit 1499.49 areas.
Well, the main driver behind this dramatic uptrend is the escalating trade tensions between the U.S. and China. Following U.S. President Donald Trump announced 10% tariffs on the lingering $300 billion of Chinese imports, China let the yuan to dilute and grow above 7 against the U.S. dollar for the first time in more than a decade.
Anyways, what’s done is done, the gold is likely to take a bearish correction now. Prices of safe-haven metal gold have dropped as the international stock markets recovered on unexpectedly stronger Chinese Yuan trade balance figures.
Gold futures for December delivery fell over 0.5% to trade at $1,512.50. During the day International stocks increased due to the People’s Bank of China (PBOC) set the Chinese Yuans daily reference rate at 7.0039 per dollar today. Meanwhile, the Chinse Yuan breaks through the level of 7 during this week, whereas, the daily fixing of Thursday was at the lowest level since 2008, it was unexpectedly stronger.
Despite today’s declines, the gold prices gained support during this week due to intensifying trade tussle and anxieties between the United States and China. Such as the President the United States Donald Trump warned to impose tariffs of $300 billion on China formerly untaxed Chinese imports from September 1st.
Gold – XAU/USD – Technical Outlook
Gold prices have made a significant movement to hit as high as 1,510 and closed a couple of Doji patterns at the peak of a bullish trend. These Doji patterns are suggesting indecision among traders.
Gold may drop further to complete 38.2% Fibonacci retracement at 1,490 before exhibiting a bullish reversal.
Key Trading Level: 1497.75
Gold – XAU/USD – Trade Tips
Consider staying bearish below 1497.75 to target 1,490 and 1,484.
All the best!