- Gold prices have stalled and running out of buyers on mixed trade talk headlines.
- The 1430s comes as a deep retracement target once the 23.6% Fibo in the 1450s gives.
Spot gold has travelled between a low of $1494.96 to a high of $1509.40 on Friday, ending Wall Street around 0.50% in the red as the precious metal struggles to maintain the bullish momentum, despite the DXY falling 0.20% on the day. While gold may be sagging into the close, for the week, gold has climbed 3.5% with respect to futures and based on the most-active contract’s finish on August the 2nd.
December gold on Comex lost $1, or less than 0.1%, at $1,508.50 an ounce. Trade wars are at the helm driving prices. The gold and silver ratio ended down -0.63% having travelled between 88.84 down to 88.02 as silver prices continue to hold in there while gold lags. Silver prices ended the day modestly higher by 0.17% within a range of $16.86 and $17.14, ending around $16.98 on Wall Street.
Mixed trade headlines
Initially, gold found a bid on the White House’s decision to hold off on granting licenses for US companies to purchase some Huawei equipment following Beijing’s halting of US crop purchases. However, risk aversion spiked on reports to the contrary and that U.S. won’t ease Huawei restrictions. Nevertheless, the two and fro of such headlines are another reminder of the recently deteriorating outlook for US-Sino trade negotiations.
“Global assets will have to grow accustomed to the reality that trade uncertainty is likely here to stay, which ultimately has consequences for asset prices and for the growth outlook. At the same time, as the pressure on China’s economy weighs on the RMB, which was allowed to weaken below the 7.0 mark, the President is likely to continue urging the Fed to lower rates which in turn could provide some positive tailwinds for gold and silver,” the at TD Securities analysts argued.
However, in the absence of further trade war escalation, on a break back below the 1480s, a deeper retracement back to the 1430s could play out once the 23.6% Fibo in the 1450s gives. On the flip side, To the upside, the 1528/30s comes as a prior support area which could come in as the next major upside target where the price would be expected to hold initial tests. Then, bull swill look to the 127.2% Fibo target which is located around 1,560. This guards territory to then the Oct 2012 highs at 1795 come into the picture on the wide. The 1800s come as the 2011 highs and the price has touched the 61.8% Fibo retracement of those highs to the late 2015 swing lows.