Gold’s Recent Up-Move Appears to be Supported by a Combination of Factors

Updated:

Gold (XAU/USD) took advantage of its recent uptick to record a new one-week high in the early Asian session today. The yellow metal opened the week on a positive (bullish) note and is supported by a collection of factors. The USD suffered a sharp drop due to the pressure coming from widespread protests across the country over the death of George Floyd by the Minneapolis police. This caused a massive USD sell-off which has been beneficial for the metal commodity.

The yellow metal is also supported by the continuous rise of Covid-19 cases across the globe which has given more credence to Gold’s safe-haven status. However, the recent glimmer of hope for a potential COVID-19 vaccine, the easing of lockdown restriction across the globe, and expectations of a “V-shaped” recovery curve for the global economy has capped any strong rally in the near term.

Investors also became optimistic after US President Donald Trump initiated the process to strip Hong Kong of its special status but did not dishonor the US-China phase-one trade deal. Neutral data release in China’s manufacturing sector also bolstered investors’ overall confidence in Gold.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — June 1

XAU/USD Major Bias: Bullish

Supply Levels: $1,745, $1,754, and $1,763

Demand Levels: $1,730, $1,722, and $1,717

Gold (XAU/USD) continues to show strong bullishness above the $1,730 pivot. We’re likely to see more volatility in the coming Asian session.

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Gold Begins June On a Positive Note

Updated:

The price of Gold (XAU/USD) remains steady above the $1,730-35 levels with an intraday high of $1,744.69 in the Asian session. The bullion is benefiting from the current risk-off sentiment by investors as tension escalates between the United States and China. The yellow metal is also benefiting from the increasing protests across the US.

Despite President Trump’s unwillingness to place additional sanctions on China, many fear that the relations between the two economic powerhouses will continue to crumble. A Chinese publication explained that groups calling for more “fighting spirit” dominate those calling for cooperation and dialogue.

However, the US Secretary of State, Mike Pompeo, condemned the ruling Chinese party in an interview with Fox, adding that the party’s military advances should not be ignored.

Meanwhile, the protests across the United States have taken precedence for the economic outlook of this week.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — June 1

XAU/USD Major Bias: Bullish

Supply Levels: $1,745, $1,754, and $1,763

Demand Levels: $1,730, $1,722, and $1,717

XAU/USD continues in line with our projection for last week. Gold is currently witnessing a slight pullback from the recent high ($1,744) to the $1,730 pivot line. This pivot line poses strong support for gold and will likely facilitate a bounce towards the $1,754 level (May 20 high) and higher. On the flip side, if gold bulls fail to defend this line, the pullback could continue to $1,722. However, gold is likely to rally for the most of this week as the US dollar might not fare well given the current state of crisis in America.

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Gold Traders Await Signal from Trump’s Speech on China-Hong Kong Affairs

Updated:

Gold has maintained a positive trajectory for a few days now courtesy of the growing US-Sino tensions. Just yesterday, the Chinese parliament approved security laws for Hong Kong which many believe will only make the already strained ties worse.

This issue caused investors’ appetite for riskier assets to diminish which was evident from the watered-down trading sentiment seen in equity markets. This consequently boosted demand for conventional safe-haven assets like gold. Gold’s upward move was further bolstered by the enduring US dollar selling bias.

The USD witnessed further depression on Thursday following the release of the US Q1 GDP print, which indicated that the US economy contracted by 5% annualized pace. This coupled with a new “leg down” in the US Treasury bonds yield further caused the USD to drop and provided an extra boost for the yellow metal asset.

Although gold looks very bullish at the moment, all that could change in the blink of an eye as the President of the United States, Donald Trump, is set to have a news conference later today. Trump’s comments on the prevailing issue between China and Hong Kong will determine what the price of gold will likely do next.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 29

XAU/USD Major Bias: Bullish

Supply Levels: $1,740, $1,754, and $1,763

Demand Levels: $1,722, $1,717, and $1,706

Gold (XAU/USD) continues to go in our projected direction smoothly. We anticipated that the $1,730 level would pose a strong resistance which we are seeing play out now. The price of gold is expected to break and sustain above this pivot level and continue to the $1,745 resistance. However, failure to defeat this level could send gold down to previous support zones. Also, President Trump’s comments in the upcoming conference could greatly influence the fall from this level if sustained.

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Gold Rallies as Washington Disregards Hong Kong’s Autonomy of China

Updated:

Gold (XAU/USD) dropped below the $1,700 level on Wednesday before rallying back above that level as the US-China tensions escalated even further after remarks from Washington on Hong Kong’s autonomy. This was the first time since the beginning of the month that Gold fell below that level as investors fled from safe-haven assets to other financial instruments like stocks and oil following optimism of the US economy reopening from Covid-19 restrictions.

Gold bulls swung into action after a Canadian court ordered that a senior Huawei official, Meng Wanzhou, could be extradited to the United States to face charges of an alleged infringement of US sanctions on Iran. This extradition could exacerbate the already weakened ties between Beijing and Washington.

At press time, Gold spot—which tracks real-time bullion trades—is trading at $1,723, up about 1.6% from yesterday’s low. This positive surge was largely triggered by US Secretary of State Mike Pompeo’s announcement that Washington no longer considers Hong Kong autonomous of China.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 28

XAU/USD Major Bias: Bullish

Supply Levels: $1,730, $1,740, and $1,754

Demand Levels: $1,717, $1,700, and $1,695

Just like clockwork, Gold bulls have defended the $1,700 pivot/psychological line and have sent the price of gold above the $1,722 resistance. However, we are likely to see strong resistance at the $1,730 level. Should Gold run out of bullish steam on this level, it could send the price back down to $1,717 which represents strong support as well as the top of the prevailing down-trend line. A retest of the $1,730 resistance from this level will be very likely. On the flip side, a sustained break above the $1.730 resistance/pivot level could very likely send Gold price to $1.740-45 in the near term.

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US-China Tensions Continue to Catalyse Further Decline for Gold

Updated:

Gold was brutally pummeled in the early hours of the Asian trading session as the US-China tensions continue to escalate.

More protests are being planned in Hong Kong on Wednesday as the country’s Legislative Council discusses a national anthem bill. The legislative session was shrouded by immense riot police presence and about 15 people have been arrested so far.

Relations between China and the United States deteriorated even further last week as China proposed national security laws for Hong Kong and Macau. President Trump’s response to the legislation is expected to be made known before this week runs out. Investors will also be paying attention to Fed Chair Jerome Powell’s comments scheduled for Friday.

Meanwhile, China has ‘counter-threatened’ a retaliation against any US actions, which could encompass sanctions and visa restrictions for bodies involved with enforcing the laws.

Analysts have also pointed out that despite the re-opening of the economy in Europe and other parts of the world, Gold remains under intense selling pressure.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 27

XAU/USD Major Bias: Bearish

Supply Levels: $1,717, $1,725, and $1,730

Demand Levels: $1,700, $1,695, and $1,674

Gold, in a rapid momentum, has broken several support lines and is now trading above the $1,700 psychological level just as anticipated. The yellow metal had plummeted by more than 1.5% early this morning due to the rising US-China tension. The psychological line is expected to hold and could very likely give rise to a V-shaped recovery as investors might be looking to buy at this level. However, a sustained decline below this line could lead to further losses towards $1,675 (daily 50-day moving average).

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UK Research Team Proposes Possible Cause for the Recent Safe-Haven Depression

Updated:

Many have become befuddled by the recent consolidating (and even depressed) state of Gold and‍ Bitcoin. In a time shrouded by economic uncertainty, shouldn’t safe-haven assets be more preferred by investors? This is the question on the lips of many including a UK research team (CryptoMarketRisk project team) who have indicated that there is significant market manipulation influencing these assets.

According to Prof. Carol Alexander of the University of Sussex Business School, we are undergoing market manipulation on an unbelievable magnitude by a few market players who lack ‘integrity.’ She added that this act is triggering a melt-down from which the financial markets may never recover from.

The team involved in this research tracked trades across global financial markets and discovered “large-scale” manipulation that was going undetected by busy regulators. The team reports that some single trades on COMEX have been extraordinarily large in a bid to influence prices—believed to be a clear violation of US market laws. However, regulators like the CFTC have been busy with the ongoing market turmoil and have not picked wind of the manipulation occurring.

The university’s study reveals that these manipulations could likely be the reason Gold and Bitcoin failed to rally in the mid-March financial markets selloff.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 26

XAU/USD Major Bias: Sideways

Supply Levels: $1,735, $1,745, and $1,763

Demand Levels: $1,722, $1,717, and $1,700

Gold remains caught up in a sideways trap. It has failed to sustain a break above the $1,730 level thereby putting it under heavy sell pressure. The 4-hour downtrend line has now intersected with the pivot level, further exposing the XAU/USD to more declines. Should the price fail to break above our pivot level soon, we could see a downward move to $1,717 this week.

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Gold Remains Under Pressure as Global Economies Begin Re-Opening

Updated:

The price of Gold (XAU/USD) fell in the Monday trading session as the economic life in Europe seems to be getting friendlier for risky assets, thereby diminishing demand for safe-haven assets. At 13:45 GMT, the gold spot dropped by about 0.6% reaching a low of $1,721/oz.

With the European equity market picking up buoyancy and the budding US-China tensions causing the dollar to be in demand, gold has remained under pressure for most of today.

General Manager of ABC Bullion in Sydney, Nick Frappell, said in his weekly preview that gold might drop to the $1712-10 support levels in the short term. However, he strongly believes that if this happens, it could pave the way for a very powerful bullish breakout.

Also, Japan has announced that it is ready to remove the state of emergency restriction in five regions in the country ahead of schedule. This decision is indicative that the coronavirus pandemic is slowing down in several parts of the world, giving riskier assets more demand.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 25

XAU/USD Major Bias: Bullish

Supply Levels: $1,745, $1,763, and $1,797

Demand Levels: $1,722, $1,717, and $1,700

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Gold Suffers Mild Decline Following Growing US-China Tensions

Updated:

Gold (XAU/USD) dipped in the early Asia trading session on Monday as growing US-China tensions continue to influence demand on the safe-haven asset.

Gold futures shed about 0.47% reaching a low of $1,724 just a few hours ago. The precious metal failed to hold on to its gains from last week’s session.

Stocks, which are generally expected to move in the opposite direction of gold, were trapped in a bout of uncertainty with Chinese stocks suffering serious losses at the open of the session.

According to reports, investors’ risk sentiment declined following China’s decision to formally table national security laws for Hong Kong and Macau as the National People’s Congress opened on Friday. This announcement caused citizens of Hong Kong to take to the streets in protest on Sunday. The protesters were met with heavy resistance from the police who fired water cannons to disperse them.

The tension between the world powers escalated after Chinese Foreign Minister, Wang Yi, said on Sunday night that the US was nearing a ”new Cold War” with China following President Trump’s threat of ‘strong action’ should the proposed law be enacted. This threat was followed by the US Commerce Department blacklisting 33 Chinese entities on Friday.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 25

XAU/USD Major Bias: Bullish

Supply Levels: $1,745, $1,763, and $1,797

Demand Levels: $1,722, $1,717, and $1,700

The XAU/USD was met with a soft decline to the $1,720’s level as projected last week. Gold has resumed on its upwards move to the anticipated $1,740 level. However, gold has to stay above $1,722 to confirm its bullish momentum. A break below that level could send the price down to $1,700 – $1,695 levels rapidly. Overall such reality seems very unlikely for gold in the time being.

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JPMorgan Alerts of the Disruptive Capacity of Digital Currency to US Influence

Updated:

JPMorgan Chase & Co cautions the US that the possible disruption of digital currency may affect the economy.

On Friday 22 May, analysts from the massive international investment firm, JPMorgan Chase, informed Bloomberg News that “there is no country with more to lose than the United States from the disruptive capacity of digital currency.”

The study’s authors include US chief economist Michael Feroli and JPMorgan, Josh Younger, head of U.S. interest rate derivatives strategy.

The analysis reveals that although the US dollar may continue to stay as a global reserve currency, other monetary factors are “quite unstable.” The two shortcomings are in-trade settlement and SWIFT messaging system.

In 2018, the US administration has used SWIFT messaging system to prevent access to payments from certain Iranian banks. This has created a divide between the US and the EU, which is an ally. At the time it was regarded as an infringement of EU law.

The experts predict the US may lose its global geopolitical supremacy if more countries found a way around SWIFT (e.g., using crypto). They finished by saying “Digital currency is an exercise in geopolitical risk management for high-income countries and especially the U.S.”

A similar message roared from an ING economist earlier in March.

Hardly Any Drastic Consequences for the Finance Industry
There are appropriate instances for the central bank to implement digital currencies, according to JP Morgan, but there may not be any drastic consequences.

The bank also thinks the US dollar’s global dominance can’t be overthrown overnight, the key areas remain “most unstable.”

Providing an international money transfer system implemented on top of a digital dollar would be a modest investment, particularly if structured to moderately affect the architecture of the domestic financial system, to safeguard a key means of project role in the world economy,” the study notes.

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Gold Recovers from Recent Dip as US-China Rift Escalates

Updated:

Gold (XAU/USD) is currently recovering from yesterday’s 1.46% dip, right after a ‘consolidating stint’ in Asia. This fresh recovery is largely stimulated by the reaction of European traders’ towards the escalation in the US-China tensions, with Beijing taking ‘forceful measures’ in Hong Kong per the National Security Bill.

The increasing concerns caused a fresh wave of safety-flight by investors which caused Gold to rally back above the key $1,730 barrier. Although the safe-haven commodity has largely recovered from yesterday’s drop, its weekly bias remains on the losing side.

This week’s drop seems to be as a result of the recent global economic upturn, with several countries relaxing their lockdown directives. Meanwhile, the US dollar continues to radiate a safe-haven appeal with the ongoing US-China rift and dwindling prospects for an anti-coronavirus vaccine which imposed selling pressure on the global stock markets.

In the long run, the US dollar price activity will continue to have a strong influence on gold trades while the short term bias for the precious metal will be determined by the bogus stimulus packages announced by governments across the globe to cushion the effects of the pandemic

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — May 22

XAU/USD Major Bias: Bullish

Supply Levels: $1,745, $1,763, and $1,797

Demand Levels: $1,730, $1,717, and $1,700

The XAU/USD has been re-stabilized above the key $1,730 pivot/support following a steep drawdown yesterday. Gold looks strongly poised to retake the $1,745 resistance and the $1,763 level subsequently. However, in the unlikely event that gold fails to stay above the pivot line, we could see the price drop to lower support zones.

Bear in mind however that we are most likely to see a slight retrace to the $1,728 level before we proceed on our upwards journey.

Note: Learn2.trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.