Gold prices have seen a strong spate of buying at the start of the week in response to lower prices across global asset markets. Despite a newly announced rate cut from the Fed last week, US equities have started the week in the red as investor focus shifts back to the ongoing US / China trade war as well as rising geopolitical tensions. The US is due to undergo a further round of trade talks with China next month and while expectations have been mostly positive there is a persistent element of concern given the volatile nature of the relationship. Previous rounds of trade talks have broken down resulting in new tariff applications from both sides. However, following a meeting between high-level Chinese officials and member of the Trump administration last week, there is the hope that a deal can be done.
Markets responded positively recently to news of a potential interim deal between the US and China which would see some new tariffs stopped and some current, active tariffs rolled back if China can make commitments over intellectual property and US agricultural purchases.
On the data front this week, Eurozone PMIs could impact risk sentiment, affecting gold prices. Data sets in the eurozone have been trending lower recently, leading the ECB to announce a fresh easing package at its latest meeting. In light of this, PMIs will be potentially less market-moving though any extreme downside surprises could increase the view of further easing.
Gold prices have been supported well since the Fed’s rate cut, despite the lowered expectations of any further easing. US data at the top of the week will be closely watched with GDP and trade balance data due. Again, and downside surprises here could see a lower USD which would help keep gold prices supported.
Technical & Trade Views
XAUUSD (Bullish above 1492, bearish below)
XAUUSD From a technical and trade perspective. Price is holding above the monthly pivot, keeping focus on further upside with a test of bids around the R1 likely to be seen on renewed momentum. Worth noting, prices are extended on a wider range view and risk of a pull back is seen. Any break below the monthly pivot at 1492 could offer potential short entries on a retest.
Silver has started the week with an enthusiastic tone, with the market currently outperforming gold. The focus on trade war negotiations continues to be a key driver for silver prices. Should we see further positive headlines around the US – Sino trade talks, this will likely keep silver supported as industrial stocks rise. However, any disruptions to the trade talks will likely weigh on silver which could be further impacted by safe-haven inflows, supporting the US dollar.
Technical & Trade Views
XAGUSD (bullish above 17.50, targeting 19.50)
XAGUSD From a technical and trade perspective. Market is still off recent highs but demand seen picking up again. Momentum favours another move higher with a retest of offers around the monthly R1 likely to provide short term resistance. However, while above longer term VWAP supports, continued upside remains likely with momentum studies showing room for further appreciation.
Please note that this material is provided for informational purposes only and should not be considered as investment advice. The views discussed in the above video are those of our analysts and are not shared by Tickmill. Trading in the financial markets is very risky.