Gold finished trading on Tuesday with a decline of 0.3% amid the recovery of major stock indexes and the strengthening of the US dollar.
After Monday’s large-scale sales, which were associated with a sharpening of trade relations between the United States and China, market sentiment changed dramatically on Tuesday. New comments by Donald Trump have significantly increased investor optimism regarding the resolution of the US-China conflict. The head of the White House wrote in his Twitter that the conclusion of a trade agreement between the US and China is still possible and soon the parties can reach a truce in a trade war. The stock markets have reacted fairly confidently, having recovered almost all of the losses on Monday. Obviously, in this situation, the outsiders in the market were defensive assets (gold, Japanese yen, Swiss franc, etc.), which were traded in the red zone throughout the day.
Today, at the Asian trading session, fresh statistics from China were in the center of attention of investors, which indicate a slowdown in economic activity in the country, amid a slowdown in industrial production, investment and retail sales. The growth of investment in fixed assets in April was 6.1% against 6.3% a month earlier. The growth of industrial production compared to the same period last year amounted to 5.4%, with the expected growth rate of 6.5%. Growth in retail sales was 7.2%, with a forecast of 8.8% and 8.7% in March. Many experts believe that against the background of aggravated trade relations between the United States and China, Beijing will strengthen its economic stimulus measures.
Weak economic statistics from China may slow the recovery of stock indices, providing moderate support for gold, but retail sales data in the US may have a stronger impact on trading today. Experts predict a growth rate of 0.7%, respectively, any significant deviations of actual data from the forecast can cause strong fluctuations in the market.
On the chart yesterday, a bearish correction was developing, which was suspended at 1294.00. Today, sellers have managed to break through this mark, which opens up new opportunities for the development of a rolling back motion in the direction of the level of 1289.00.
Resistance Levels: 1298.50, 1301.00, 1310.00;
Support levels: 1289.00, 1284.00, 1279.50.
The main scenario - a decline to 1289.00.
An alternative scenario - consolidation above 1298.50 and growth to 1310.00.
The market has dramatically changed the news background, which now supports the development of a downward movement. Signals for the continuation of the correctional wave also prevail on the price chart, therefore, within the day, we give preference to shorts, which we are looking for in the area of the 1298.50 mark.