GOLD Price Rises Amidst Global Uncertainty But...

Gold Price Rises Amidst Global Uncertainty

Introduction:
Gold prices have seen a consecutive second-day increase, as multiple factors converge to provide support. Concerns about a potential global economic downturn and deteriorating US-China relations are bolstering the appeal of the safe-haven metal. Additionally, retreating US bond yields are encouraging profit-taking in the US Dollar, further boosting the positive momentum for gold.

Gold's Positive Traction:
Gold prices are rebounding from a recent one-week low, reaching around the $1,915 region. The XAU/USD pair is currently trading in the $1,925-$1,926 range, marking a gain of over 0.30% for the day.

Global Economic Concerns:
Amidst rising worries about the state of China's economy and a downward revision of Japan's second-quarter GDP growth, there are mounting concerns about a potential deeper global economic downturn. These factors are driving investors to seek refuge in gold, a traditional safe-haven asset.

US-China Relations:
The ongoing tensions between the United States and China, the world's two largest economies, are adding to gold's appeal. A recent report from The Wall Street Journal revealed that China has instructed officials at central government agencies not to use iPhones for work. These developments, coupled with US Secretary of Commerce Gina Raimondo's comments on maintaining Trump-era tariffs on China until a US Treasury review is completed, have created a cautious atmosphere in the equity markets.

US Dollar Weakness:
Gold's ascent is also supported by a relatively weaker US Dollar. The recent rally in the USD, which reached its highest level since March 9, is prompting some profit-taking among USD bulls. A declining Greenback tends to boost demand for US Dollar-denominated commodities like gold.

Fed's Hawkish Stance:
However, the possibility of the Federal Reserve (Fed) maintaining its hawkish stance and keeping interest rates higher for an extended period could limit gold's upside potential. Strong economic data from the US, such as the ISM Services PMI and Weekly Jobless Claims, point to a resilient economy and support expectations of further policy tightening by the Fed.

Upcoming Events:
Market participants are awaiting China's inflation data and the G20 leaders' summit over the weekend, potentially leading to cautious trading. A continuation of the recent upward movement in gold prices would confirm the end of the recent pullback from a one-month peak near $1,953. On the other hand, bears may wait for a sustained break below the 200-day Simple Moving Average (SMA) before reevaluating their positions on gold.

Conclusion:
While gold prices are experiencing a second consecutive day of gains, they are on track to register losses for the first time in three weeks. The direction of US bond yields, as well as broader risk sentiment, will continue to play pivotal roles in influencing gold's short-term trading dynamics. In light of the ongoing uncertainties in the global economy and geopolitical tensions, gold remains an asset of interest for investors seeking refuge from market volatility on the final day of the trading week.

Our preference

Short positions below 1932.00 with targets at 1915.00 & 1907.00 in extension.

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