Gold prices were initially off to a bullish start on the last day of trading in 2019. XAUUSD reached new three-month highs at $1,525.04 during the European session. However, the precious metal was not able to sustain its gains and closed with an $8.24-loss for the day at $1,516.80.
US-China Phase One Deal to be Signed Soon
It would seem that risk appetite, which was sparked by news that the US and China could soon sign their phase one deal, finally caught up on gold. Earlier last week, reports came about that a delegation from China was preparing to fly to Washington to finalize an agreement. This may have then led to risk appetite because a final phase one deal would ease concerns about the trade war. Consequently, the news was bearish for gold as investors do not see much need for its safe haven appeal.
We can therefore expect to see more selling pressure on XAUUSD if these reports are confirmed in today’s trading.
On the hourly time frame of XAUUSD, we can see that gold prices have pared some of its gains. Drawing the Fibonacci retracement tool from the low of December 30 to the high of December 31, we can see that the precious metal has pulled back to the 61.8% Fib level. It also found support at the rising trend line from connecting the lows of December 26 and December 30. These reversal candles on the hourly chart may mean that gold prices are on their way to re-testing resistance at their three-month highs at $1,525.04.
If there are enough buyers in today’s trading and the precious metal is able to break through resistance, you can eye $1,533.98 as the next resistance level where XAUUSD made highs on September 25.