Gold rises to 2-week high as US-China trade deal, Brexit favor safe havens
|- Gold revisits month-start levels by nearing $1306 ahead of London open on Wednesday.
- Brexit and trade developments can act as near-term catalysts.
- $1302 and $1308 are likely immediate levels to watch.
Gold trades near the highest level in two weeks, around $1306, on early Wednesday. The yellow metal crossed 50-day simple moving average (SMA) for the first time since November 2018 as latest communication from the US policymakers concerning trade deal with China joined market troubles juggling with the Brexit drama.
Having witnessed another defeat at the parliament, the UK PM Theresa May announced further steps. The PM’s statement signals Wednesday’s voting to leave the EU without any deal, which if failed can lead to another voting round on Thursday relating to extending the Article 50 deadline from March 29.
The British Pound (GBP) declined after the development and triggered risk-off moves, which in-turn supported gold. Adding to the sentiment, EU policymakers’ comments that raised questions of the future flow of Brexit talks whereas some among the British political group are actively trying to topple PM May from her seat.
While it has been a few days since we had any strong comments on the US-China trade deal prospects, late-Tuesday marked the return of speculations. The US Trade Representative Robert Lighthizer and The Secretary of State Mike Pompeo were the first to note. Lighthizer was reported to say that the trade negotiations between the US and China are close to a solution but is very near to critical phase. On the hand, Pompeo criticized China and raised bars between both the superpowers.
Even if fewer chances support March 29 Brexit as of now, positive developments at the British parliament could be key to placate risk aversion whereas news signaling a trade peace between world’s two largest economies can help recall Gold sellers.
Gold Technical Analysis
Having breached $1302-03.50 area, comprising 50-day SMA, Gold prices may aim for $308 and $1313.
Should there be a downside break of $302, $1295, $1290 and $1286 can come back on the chart.
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