Will gold shine more? The market in worse moods

Refund on gold market just after Independence Day it can start slightly longer and more lasting increases in the price of this metal. Particularly that recent reports from the US-China trade negotiations front seem to fit into this growing scenario.

The market in worse moods, gold in the price

This week brings deterioration of moods in the financial markets. Investors again began to fear trade wars. The change in mood took place after US President Donald Trump threatened to impose new tariffs on Chinese goods if the current negotiations fail. This is a big change, because earlier the American administration suggested that almost all issues were already agreed. However, this has changed. Reuters, citing an anonymous source in the White House, said Americans doubt the possibility of signing the first phase agreement before the end of the year. Earlier, such doubts also flowed from Beijing, but financial markets, especially stocks, ignored them.

The American Congress added fuel to the fire, taking steps to ensure the observance of human rights in Hong Kong, where anti-government protests have been going on for weeks. China perceived this as interference in its internal affairs. This also stands in the way of an agreement.

The key date in the negotiations is December 15. Earlier, US Treasury Secretary Steven Mnuchin announced that if no agreement was reached by then, the US would impose new duties on China. And after such a decision, agreement would be definitely harder than now.

No signed preliminary agreement, which a few weeks ago the financial markets hoped that it would be until the end of November, could strongly spoil sentiment at the end of the year. From here, it's only a step to escape from risky assets, which would automatically prefer assets safely. Just gold.

Gold - present situation and prospects

The situation on the XAU / USD daily chart indicates such a scenario. Return in the first half of November from the 1445,67-1452,92 support zone, created by 38,2 percent. the abolition of Fibonacci and the local maximum from July 19, which reinforces the proximity of the lower limit of the channel in which the gold has moved since the peak was set in early September, strengthens the demand side. Especially that prices returned above the local hole from October 1 (1459,13).

XAU / USD chart, D1 interval. Source: MT4 Tickmill.

On the basis of technical analysis, the road to the 1500 area, where resistance currently forms the upper limit of the said downward channel, is open. This is a minimum plan. In a slightly more optimistic scenario, the mountain breaks out of the channel and increases to around 1557,02, i.e. to the September peak.