We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: France 40: 2.37% Germany 30: 1.91% FTSE 100: 1.20% Wall Street: 1.19% US 500: 0.84% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/BqYlafcod9
  • OPEC+ agrees in principle to extend production cut by a month, according to sources
  • Has the #Euro been saved? Find out from @CVecchioFX here: https://t.co/eiXfOTyGa6 https://t.co/k0flD1C2H7
  • China vows to take countermeasures against US list on 33 entities
  • ECB's Lane says PEPP boost is a proportionate response to outlook, adds that the ECB stands ready to adjust all of its instruments $EUR
  • $EURUSD: los continuados avances auguran más angustia cuando llegue la corrección #eur #usd #BCE #trading https://t.co/YWe3C3FJ6D
  • ECB's Hozmann says PEPP program is efficient in reducing distortions $EUR
  • 🇮🇹 Retail Sales MoM Actual: -10.5% Previous: -20.5% https://www.dailyfx.com/economic-calendar#2020-06-05
  • USD/JPY is approaching medium-term uptrend resistance and while the outlook remains constructive, the advance may be vulnerable near-term while below confluence resistance. Get your $USDJPY technical analysis from @MBForex here: https://t.co/93D7AyhHtG https://t.co/mgchaQhc4K
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.20%, while traders in US 500 are at opposite extremes with 75.96%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Lo0Rq3fRxE
Gold Prices Stuck in Holding Pattern as US and China Hold Trade Talks

Gold Prices Stuck in Holding Pattern as US and China Hold Trade Talks

2019-07-17 00:30:00
David Song, Strategist
Share:

Gold Price Talking Points

Gold prices appear to be stuck in a holding pattern as US Treasury Secretary Steven Mnuchin intends to hold a call with Chinese officials this week, but current market conditions may keep the precious metal afloat as the Federal Open Market Committee (FOMC) is widely expected to shift gears later this month.

Gold Prices Stuck in Holding Pattern as US and China Hold Trade Talks

The price of gold continues to give back the advance from the monthly-low ($1382) as the US Retail Sales report beats market expectations, with private-sector spending expanding 0.4% in June versus expectations for a 0.2% rise.

Developments coming out of the US may continue to drag on bullion as President Donald Trump tweets “China wants to make a deal,” but the looming change in monetary policy may have a greater impact in dictating gold prices as the Federal Reserve appears to be on track to insulate the economy from the shift in trade policy.

Fed Chairman Jerome Powell continued to endorse a dovish forward guidance in a recent speech, with the central bank head stating that “many FOMC participants judged at the time of our most recent meeting in June that the combination of these factors strengthens the case for a somewhat more accommodative stance of policy.

Image of Fed Fund futures

The comments reinforce expectations for an imminent change in monetary policy as Fed Fund futures highlight a 100% probability for at least a 25bp rate cut on July 31, and the central bank may continue to change its tune over the coming months as the US and China struggle to reach a trade deal.

However, it remains to be seen if the FOMC will establish a rate easing cycle as the US economy shows little signs of a recession, and the committee may revert back to a wait-and-see approach after delivering an “insurance cut” as Chairman Powell and Co. “expect growth in the United States to remain solid, labor markets to stay strong, and inflation to move back up and run near 2 percent.

With that said, gold prices may continue to benefit from the current environment amid the threat of a policy error, and the price of bullion may exhibit a more bullish behavior over the remainder of the year as market participants look for an alternative to fiat currencies.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

Gold Price Daily Chart

Image of gold daily chart
  • The broader outlook for gold is no longer mired by a head-and-shoulders formation as both price and the Relative Strength Index (RSI) break out of the bearish trends from earlier this year.
  • Moreover, the recent pullback in bullion appears to have run its course as the Fibonacci overlap around $1380 (100% expansion) to $1385 (78.6% expansion) offers support, but the price of gold appear to be stuck in a wedge/triangle formation as it fails to extend the series of higher highs and lows from the previous week.
  • Will keep a close eye on the monthly opening range as the RSI falls back towards trendline support, with a break/close below $1402 (78.6% expansion) raising the risk for a move towards the July-low ($1382).
  • Need a break/close above the Fibonacci overlap around $1418 (100% expansion) to $1422 (23.6% expansion) to bring the topside targets back on the radar, with the first area of interest coming in around $1444 (161.8% expansion) to $1448 (382.% retracement).

For more in-depth analysis, check out the 3Q 2019 Forecast for Gold

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.