- Gold firms up on trade war/currency risks as Dollar sinks.
- Dollar falls as US yields crumble and US data deteriorates.
Gold has been in demand and extended its Friday's rally, moving to a high of $1,469.70 following heightened tensions n the global stage between the US and China taking the spotlight away from the Federal Reserve for the time being. However, markets are increasing their bets that the Federal Reserve will cut interest rates again at the next meeting which has been weighing on the Dollar and has enabled the yellow metal to break into fresh bullish territories.
As for futures, after a 2.7% gain on last week's business, for December delivery, the contract on Comex climbed $21.80, or 1.5%, to $1,479.60 an ounce following a settled on Friday at $1,457.50 an ounce which was the best closing level for a most-active contract finish since May 9, 2013.
Overnight, China’s yuan dropped to the lowest level in more than a decade after the People's Bank of China fixed USD/CNY above 6.90 after President Donald Trump announced additional tariffs on Chinese goods - China pledged retaliation and there are presumptions that the talk of China banning or taxing US imports of agricultural products. This sent USD/CNY to breach into the 7 handle which sparked a risk-off rally.
"The PBOC’s acceptance of USD/CNY above 7.00 has un-nerved investors further," analysts at ING Bank explained. "Expect the safe-haven JPY and CHF to remain in demand and pro-cyclical currencies to stay under pressure. Only some surprise conciliatory wording on trade or the Fed surprising with more to offer in terms of easing can reverse this defensive risk environment."
All eyes on the Fed
Markets are looking for a deterioration in US labour market as well as today's services data for confirmation that the Fed will start signalling that they are willing to do more than insurance cuts - An escalation of trade tensions should also do it.
Indeed, on that notion, US yields are sharply lower, with 10-year Treasuries down 5.80% at the time of writing. Global equities are in a sea of red as well. All the ducks are in a line on the fundamental front, but the technical backdrop is also strongly bullish.
Gold levels
The bulls are well in control based on fundamentals and have their eyes on the 127.2% Fibo target up at $1,560 while trading above the 20-day moving average and the 78.60% retracement of the recent ranges. The July swing highs of 1453.95 are a stone throw away at this juncture. Meanwhile, on a reversion, a 23.6% retracement to the 1435 level comes into play. 1421 marks the confluence of the 20, 50 and 200 daily moving averages
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD inches higher to near 1.0900; next barrier at four-month highs
EUR/USD advances for the second consecutive day, trading around 1.0900 during early Tuesday's European session. The analysis of the daily chart shows a weakening of a bullish trend, as the pair is positioned below an ascending channel.
GBP/USD bullish potential seems intact while above 1.2900 mark
GBP/USD lacks firm intraday direction and oscillates in a narrow range on Tuesday. The fundamental backdrop and the technical setup seem tilted in favor of bulls. A convincing break below the 1.2900 mark is needed to negative the positive bias.
Gold's struggle with $2,400 extends amid market caution
Gold price is making another attempt to reclaim $2,400 on a sustained basis, replicating the moves seen during Monday’s Asian trading. Gold price appears to be benefiting from a typical market caution and renewed China’s economic worries and ahead of key US earnings reports.
Bitcoin finds support around the $67,000 level
Bitcoin and Ripple prices are holding steady around their respective weekly and daily support levels, hinting at an imminent rally. Meanwhile, Ethereum is encountering resistance at the $3,530 mark; a decisive close above this level would signal a bullish breakthrough.
Earnings review
While Nvidia’s results are still extremely important for overall sentiment, there is a hope that sales growth and revenues can pick up across a broad range of global markets and sectors.