Fundamental analytics

Gold updates multi-year highs on strengthening trading concerns

XAUUSD

Gold continues to renew multi-year trading highs amid rising tensions in the US and China.

On Friday, China said it would impose counter duties on US goods. In response, Donald Trump said he would increase duties on goods from China. The new mutual threats of the parties destabilized world markets and contributed to the growth of demand for traditional defensive assets.

Today, the growth of quotations continued. Gold tested the level of $ 1555. Investors reacted to the decision of the People's Bank of China to weaken the yuan. At the time of writing, the pair US dollar / yuan is trading at 7.165. The decision of the Bank of China is not welcomed by the financial regulators of other Asian countries, which intend to soften their monetary policy to maintain their weakening economies. According to Bloomberg, the Ministry of Finance of South Korea will take immediate measures in case of destabilization of the situation in the foreign exchange market. Office can not allow excessive growth of won against the renminbi.

Now gold has retreated from intraday highs and is trading near $ 1540. After the Vice-Premier of China, Liu He said that his country does not want to aggravate the conflict and intends to resolve the problems through negotiations.

Today, the US is expected to publish data on orders for durable goods, but, most likely, the main impact on the trading will have news related to international trade and the situation on the stock exchanges.

On the chart, the price broke through the level of 1535.00, signaling the continuation of the medium-term bull trend. Locally, after a retest of the level of 1555.00, a correctional movement develops, the immediate target for which is the level of 1526.00.

Resistance Levels: 1547.00, 1555.00, 1565.00;

Support Levels: 1535.00, 1526.00, 1500.00.

The main scenario is a retest of the level of 1547.00 and the further formation of a corrective movement by 1526.00.

An alternative scenario is consolidation above 1547.00 and growth to 1560.00.

Globally, the gold maintains positive fundamental background. But locally, after the statements of Chinese Deputy Prime Minister Liu He, the demand for protective assets began to decline. Therefore, for a short time we are considering shorts in the direction of the level of 1547.00.