US-China Tensions Continue to Catalyse Further Decline for Gold

US-China Tensions Continue to Catalyse Further Decline for Gold

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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