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

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

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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