Gold Price Talking Points
The cost of bullion climbs to a uninformed yearly high ($1555) amid flourishing tensions between a US and China, and stream marketplace conditions are expected to keep bullion afloat as there appears to be a moody to safety.
Gold Prices Climb to Fresh 2019 High as US and China Boost Tariffs
Gold prices might continue to vaunt a bullish function as China boosts tariffs on a US, with President Donald Trump responding by announcing that “starting on Oct 1st, a 250 billion Dollars of products and products from China, now being taxed during 25%, will be taxed during 30%.”
In addition, a “remaining 300 billion Dollars of products and products from China, that was being taxed from Sep 1st during 10%, will now be taxed during 15%,” and a flourishing hazard of trade fight might spin a flourishing regard for a Federal Reserve as “trade process doubt seems to be personification a purpose in a tellurian slowdown.”
In turn, a Federal Open Market Committee (FOMC) might come underneath increasing vigour to exercise a rate easing cycle, though it stays to be seen if a executive bank will retreat a 4 rate hikes from 2018 as Chairman Jerome Powell argues that financial process “cannot produce a staid rulebook for general trade.”
Nevertheless, Fed Fund futures continue to simulate strenuous expectations for a 25bp rebate on Sep 18, with a total now display renewed conjecture for a 50bp rate cut as a ongoing change in trade process dampens a opinion for a US economy.
Little signs of a US-China trade understanding might pull a flourishing array of Fed officials to change their tune, and a FOMC might continue to change a brazen superintendence for financial process as “committee participants have generally reacted to these developments and a risks they poise by changeable down their projections of a suitable sovereign supports rate path.”
With that said, descending US Treasury yields along with a inverting produce bend might pull marketplace participants to sidestep opposite fiat currencies, and a risk of a process blunder might keep bullion prices afloat as there appears to be a moody to safety.
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Gold Price Daily Chart
Source: Trading View
- Keep in mind, the broader opinion for bullion prices sojourn constructive as both cost and a Relative Strength Index (RSI) clear a bearish trends from progressing this year.
- Moreover, bullion has damaged out of a near-term holding settlement following a unsuccessful try to close next a $1402 (78.6% expansion) region, with a RSI still tracking a bullish arrangement from April.
- More recently, bullion climbs to a uninformed yearly-high ($1555) following a unsuccessful attempts to tighten next a $1488 (61.8% expansion), though need break/close above $1554 (100% expansion) to open adult a Fibonacci overlie around $1629 (23.6% retracement) to $1634 (78.6% retracement).
- Will keep a tighten eye on a RSI as it works a proceed towards overbought territory, with a mangle above 70 expected to be accompanied by aloft bullion prices as a bullish movement gathers pace.
For some-more in-depth analysis, check out a 3Q 2019 Forecast for Gold
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— Written by David Song, Currency Strategist
Follow me on Twitter during @DavidJSong.