Chart of the Day XAUUSD
Pivotal Test XAUUSD
China reported 132 new deaths to bring the death toll to 2,000, albeit Hubei added 1,693 new cases (lowest since the methodology change last week). Meanwhile, US president Trump tweeted that the US “cannot, & will not become such a difficult place to deal with in terms of foreign countries buying our products, including for the always used National Security excuse, that our companies will be forced to leave in order to remain competitive”. This verbal jawboning came ahead of potential administration moves to block sale of get engines to China.
The USD has continued its recent good run, with the Bloomberg DXY rising 0.2% to its highest level since the end of November last year. The BBDXY is now more than 2% higher this year while the EURUSD is trading at an almost three-year low. The recent strong performance of the USD follows divergent data trends in the US and Europe (illustrated overnight by the rebound in the Empire survey set against the weakness in the ZEW). Citi’s US data surprise index is near its highest level since April-2018 while the European equivalent has fallen away sharply this month. The risk-off backdrop has also benefited the USD, albeit more so against commodity and growth-sensitive currencies.
Low(er) for interest rates, escalating global recession risks, exacerbated by US-China trade tensions, Coronavirus concerns, heightened geopolitical rifts amid rich equity and credit market valuations, coupled with strong central bank and investor buying activity, are all combining to buttress a bullish gold market environment.
From a technical and trading perspective, the XAUUSD has continued to track the price pattern witnessed in last years trade, as highlighted in the chart and discussed repeatedly in the Weekly Market Outlook. Prices have expanded from the consolidation and are now facing a near term decision point as bulls test a Pivot (Yearly & Monthly R1) and Fibonacci cluster 1626/1640 this area may prove sticky certainly on an initial test (especially as we witness momentum divergence developing), profit taking could precede a correction to retest ascending trendline support towards 1530. Consecutive closes above 1640 will encourage bullish momentum and see prices make a move to test offers and stops towards 1700.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!