Gold benefited from broad dollar weakness in yesterday. XAUUSD traded to an intraday low of $1,456.21 then strongly rallied to $1,473.60 before closing at $1,470.99. The precious metal was up $3.98 for the day.
There were no positive developments around the highly-anticipated “phase one” deal between China and the US. In fact, reports out of Beijing yesterday hinted that negotiations could be turning sour. A report from CNBC cited that there is reluctance in the Trump administration to roll back tariffs. Consequently, the uncertainty around the trade deal sparked demand for gold which is widely considered as a safe haven asset.
The rally on the precious metal was also fueled by news that US President Donald Trump and Federal Reserve Chairman Jerome Powell met in the White House yesterday. After the meeting, speculations swirled that the Fed might maintain its accommodative monetary policy for an extended period dampened demand for the US dollar.
Today, data on US building permits is scheduled for release at 1:30 pm GMT. The estimate is for the report to show 1.39 million permits were issued last month. Meanwhile, statistics on housing starts is eyed at 1.32 million.
The rally in gold yesterday was enough to push it to test resistance at the neckline of the potential head and shoulders chart pattern at $1,474.40. The hourly time frame reveals a bullish flag. A strong close above Asian session highs and the neckline could mean that the next resistance level will be at $1,488.47.
On the other hand, if resistance holds, sellers could price back down to yesterday’s lows at $1,456.21.