Gold prices (XAUUSD) are rallying this Tuesday after the latest US-China trade related comments by US President Trump reignited safe haven plays.
XAUUSD is currently trading at 1477 with potential for further upside on the day, after President Trump hinted that he would prefer a US-China trade deal to be inked after the 2020 elections, which are still 11 months away.
China has not taken this very well. Still smarting from last week’s signing of the so-called “Hong Kong bill” into law, Beijing appears to have responded if reports from Global Times are to be believed. Global Times Editor-in-Chief Hu Xijin tweeted that China is considering imposing “visa restrictions on US officials and lawmakers who’ve had an odious performance on Xinjiang issue”. The tweet further went on to say that “it (China) might also ban all US diplomatic passport holders from entering Xinjiang.”
The markets have interpreted the comments from both sides as being negative to the current US-China trade situation and this has set off risk-off sentiment in the market, with XAUUSD on bid at the moment.
Gold prices are gradually inching up towards the resistance price of 1479.32, formed by previous lows of August 13 and November 5, with a cluster of lows in between. This could therefore serve as the first pitstop for rising prices if safe haven plays continue to dominate the market.
The 1479 price level is however expected to be the lower band of an entire resistance zone which should span from 1479 below to 1493 above (shaded area), as this zone features lows of varying prices from August 2019 till date.
A break above this resistance zone could open the door for gold price to target the previous highs of October 1/25 and November 1, which are found at 1515.20. Further upside momentum takes XAUUSD to August 13 and September 24 highs at 1534.75.
Unwinding of safe haven plays could send gold back to previous support areas at 1460 and 1450, especially if we have a senior US official walking back on some of President Trump’s comments. It would not be strange if this were to occur; there have been instances in the past where this has happened.
Further impetus for gold price movements could also come from Friday’s jobs report; the last for the year.More content