Gold price is up by 0.45% as the US Dollar shows weakness as a result of the riots that are taking place across the country. However, the yellow metal is starting to show some signs of exhaustion. This is partly due to the risky sentiment that the markets have assumed at the start of the trading week, as markets react positively to the measures announced by US President Donald Trump against China and Hong Kong.
However, this risky sentiment could all change in a jiffy as the latest news reports on the US-China situation may yet challenge this risk-on sentiment. Bloomberg is citing sources close to the matter as saying that officials of the Chinese government officials have asked major state-run agricultural firms to suspend purchases of soybeans, pork and some other agricultural products from American farmers. This may be a possible retaliation from Beijing to Friday’s announcements by President Trump. The Chinese Foreign Ministry has also doubled down on this measure, reiterating that “China will resolutely defend its security, development interests”.
From the US side, Reuters is reporting that legislation to stop American investment into foreign defence companies with links to China’s military could be in the works. Top Republicans are said to be spearheading this effort. These news reports could sour the sentiment even as gold price jostles for upward momentum.
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Technical Outlook for Gold Price
Gold price on the XAUUSD daily chart shows that today’s upside move has stalled at the descending trendline which connects the tops of the last two weeks. This also coincides with the 1738.54 resistance level, formed by the previous highs of 16 April and 23 April 2020. Any further advance of price has to occur in the context of a break above these limits, with 1753.29 (high of 20 May 2020) constituting the closest resistance target.
On the flip side, failure to breach these resistance limits could open the door for a pullback towards 1722.30 (high of 9 March and lows of 13 May and 27 May 2020), with the support levels at 1699.17 and 1680.24 located not too far behind.