Gold Recovers from Recent Dip as US-China Rift Escalates

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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

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.

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