Prior to the surge higher, gold had moved very little trading right around the $1475 level, as it remained in a narrow range trading roughly between $1460 and $1480, where it has spent the best part of the last few weeks. It had spent this time consolidating after dropping sharply back through the key $1500 level to a three month low below $1450. For the prior two months gold had settled around the current key $1500 level, moving back and forth around this level, seemingly content to not move anywhere else, so this level is highly likely to provide some support should gold fall back that far in the near future. It is however likely to find some support at levels above $1500 should it decline.
In the first week of September gold fell sharply from its multi year highs above $1550 down back below the $1500 level in the first of several iterations of that price action. At the start of August, gold surged higher off support at $1400 towards the recent six year high above $1530, before its more recent surge higher yet again. It was well supported by the $1400 level throughout July, and any time it moved lower, it was quickly bought up and supported, pushing it back above this level, which means at some point in the future, this level may also prop up gold.
Several issues in the last week have impacted gold and increased its volatility. Recent tension between the United States and Iran has sent gold surging higher as investors have returned to the safe haven asset. Gold had recently been well supported by a range of factors including weak economic growth, rising inflation expectations and a weaker dollar. However, it is the recent signing of phase 1 of the U.S.-China trade deal that boosted gold as the deal seemingly failed to ease concerns about trade differences, as the United States retained some tariffs on Chinese goods. After signing the deal, United States President Donald Trump said the U.S. and China are “righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers and families.” He added that the deal has “total and full enforceability.” According to text released by the White House, the deal details a $200 billion increase in Chinese purchases of U.S. goods over two years, which was a priority for the U.S. President.
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.