Gold price action on the XAUUSD daily chart continues to trade within the range, but bulls are taking charge as US-China tensions escalate over the proposed new national security law.
Gold price (XAUUSD) has surpassed the 1735 mark as it registers a 0.5% gain on the day, as risk-off sentiment gradually returns to the market following an escalation in US-China relations. However, gold is still on track to register a mild decline on the week despite hitting price peaks not seen since 2013.
China’s new National Security Bill was proposed yesterday by the NPC parliament, which is formed by handpicked delegates from the ruling party in China.
Global Times quotes Speaker of the NPC Parliament Zhang Yesui as saying it was “necessary for the NPC to exercise the functions and powers entrusted to it by the Constitution, to establish and improve the legal system and enforcement mechanism of the HKSAR to safeguard national security at the national level and to uphold and improve the governance system of “One Country, Two Systems.”
The US and dissident voices in Hong Kong say the law will empower Beijing to use force to quell pro-democracy agitations in the country and are vehemently opposed to its passage. The US is championing calls for China to pay compensation for what it terms as the mishandling of the coronavirus outbreak.
The NPC/CPPCC annual sessions continue, and more pronouncements from these meetings could continue to affect the risk sentiment in the market.
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Technical Outlook for Gold Price (XAUUSD)
Gold price action on the XAUUSD daily chart shows that gold was unable to make a significant advance after breaking the symmetrical triangle to the upside, stalling at 2013 highs. Price continues to trade in the range defined by the 1722.30 price floor and 1753.29 price ceiling. Today’s leg up is a continuation of the seesaw movement in the gold price activity as it trades between the range’s boundaries. Only a breakout of the 1753.29 price ceiling will allow gold price to extend the advance towards the 1792.26 price level as it aims to complete the measured move that takes into account the initial uptrend move that preceded the triangle.
On the flip side, a breakdown of the floor of the range allows further retreat towards 1699.17. A possibility of gold price pushing lower towards 1680.24 and 1658.89 on extended selling cannot be ruled out in this scenario.
Changes in risk sentiment could continue to determine price action into next week.