Gold keeps the red amid Yuan slide
- Gold is flashing red despite Yuan devaluation and rising fears of Sino-US trade war.
- Oversold conditions might yield a minor corrective rally.
Gold, widely considered an antithesis to fiat currencies, finds no takers despite rising odds of US-China currency war.
At press time, the yellow metal is trading at $1,218.70, having clocked a one-year low od $1,211.65 yesterday.
Prices have dropped more than 10 percent in the last three months despite US-China trade war, triggering speculation the yellow metal is losing its safe haven appeal.
Further, it is showing no signs of life even though the US and China are closing on a full-blown currency war. The People’s Bank of China (PBOC) is increasingly favoring a weaker Yuan and that could force the Trump administration to retaliate in kind. Moreover, President Trump has already expressed concerns regarding Fed rate hikes.
That said, the oversold technical conditions, as shown by the relative strength index (RSI) could put a bid under gold prices.
Gold Technical Levels
Resistance: $1,223 (50-hour MA), $1,230 (resistance on the hourly chart), $1,239 (200-hour MA).
Support: $1,215 (session low), $1,211 (previous day’s low), $1,200 (Psychological level).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
