Gold Under Pressure
Gold prices are extending their slide on Thursday with the futures market now testing below the 3,254.65 level. The move comes amidst a weakening of safe-haven demand in response to positive noise around US/China trade. Yesterday, Trump told reporters he is confident the US will agree a trade deal with China. These comments come on the back of similar sentiment shared last week where Trump said that tariffs would likely soon come down for China.
US/China Trade
Against this backdrop of growing optimism around US/China trade, risk assets are gaining ground through the back of the week, diluting demand for gold and other safe haven assets. Indeed, the sell of fin gold comes despite a slew of weaker-than-forecast US economic data. Yesterday, adv Q1 GDP came in at -0.3%, down from 2.4% prior and below the 0.2% the market was looking for, while core PCE came in at 0%, down from 0.5% prior and below the 0.1% the market was looking for.
Bullish USD Story
However, with the US/China trade story stealing the spotlight, USD has risen on the back of the data. Typically, weak GDP and PCE would see USD under heavy selling pressure. However, it seems that optimism over a scaling back of China tariffs is offsetting the negative impact of the data with rate-cut projections little changed on the back of the data. With this in mind, USD looks likely to continue higher near-term, putting further pressure on gold.
Technical Views
Gold
The sell off in gold has seen the market breaking back inside the bull channel and back under the 3,254.65 level. While below here, and with momentum studies falling, focus is on a test of 3,164.82 next and the bull channel lows beneath.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.