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China Trade Restrictions Announced
Gold prices are rising today on safe-haven inflows after tensions between China and the US were seen ratcheting up a level. Overnight, China announced a fresh set of restrictions on exports of certain rare metals used in the semiconductor building process. Tit-for-tat actions based around the high-tech microchip sector have been a key issue in US/China relations in recent years. As part of the new controls, Chinese companies will need to gain permission in order to export gallium and germanium products to the US.
US Restrictions Incoming
These news controls will take effect from August 1st and are seen in response to news that the US is considering new restrictions on the export of high-tech microchips to China. Additionally, the US and the Netherlands are due to announce fresh restrictions on the export of chipmaking equipment to China over the summer as part of a drive to stop western technology being used to improve Chinese military strength.
Gold Outlook
With US markets offline today for the Independence Day holiday there, gold prices look poised to continue higher near-term while USD drifts. Looking ahead, the US labour market data due at the top of the week will be a key risk for gold with any strength in the data likely to bolster hawkish Fed expectations, weighing on metals into next week.
Technical Views
Gold
The sell-off in gold prices saw the metal breaking below the bull channel lows and support at 1973.51. However, ahead of a test of the 1871.04 level gold prices have found fresh demand, turning higher. With momentum studies rising, the focus now will be on a retest of the 1973.51 level with bulls needing to see a break of the level to avoid a further sell-off.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.