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· Gold prices inched down on Monday as signs of progress towards a trade deal between the world’s two largest economies and strong U.S. jobs data boosted risk appetite, weighing on the precious metal.
Spot gold fell 0.1% to $1,511.42 per ounce by 0519 GMT, while U.S. gold futures were up 0.2% at $1,513.90 per ounce.
· The United States and China on Friday said they made progress in talks aimed at defusing a nearly 16-month-long trade war that has harmed the global economy, and U.S. officials said a deal could be signed this month.
· Markets took further optimism from economic data last week that eased apprehensions of a slowdown fuelled by the long-drawn trade war between the world’s two largest economies.
· In the latest addition, U.S. job growth slowed less than expected in October, while hiring in the prior two months was stronger than previously estimated, data from the Labor Department showed.
· “In the short term, market sentiment is too good for investors to pay attention to gold,” said Margaret Yang Yan, a market analyst at CMC Markets, adding that a weaker dollar is limiting losses in the yellow metal.
The dollar had tried to rally on Friday after U.S. payrolls beat expectations, however, it was undone by a soft manufacturing survey which left it looking heavy.
Against a basket of currencies, the dollar was stuck at 97.218 having touched a three-month low of 97.107 on Friday. It was now targeting the August trough of 97.033.
“But in the mid- to long-term, there is still upside for gold as the U.S. Fed is expected to reduce rates next year to strengthen the economy and boost market confidence, ahead of the U.S. elections,” Yan said.
· Last week, the Fed cut interest rates for a third time this year, but signalled there would be no further reductions unless the economy takes a turn for the worse.
· Asian shares rose to 14-week highs on Monday, as growing optimism over U.S.-China trade talks and upbeat U.S. job data boosted global investors’ appetite for riskier assets.
Spot gold may test a resistance at $1,519 per ounce, a break above which could lead to a gain to $1,534.
· In Europe, the new head of the European Central Bank (ECB) Christine Lagarde will be giving her first speech in the role later in the day and markets expect she will stick to an easy policy script left by her predecessor, Mario Draghi.
· Gold technical analysis: 61.8% Fibo limits immediate upside amid bullish MACD
With the sustained trading beyond 50% Fibonacci retracement of September-October upside, Gold is now gearing up to confront another key resistance while taking the bids to $1,514 during the initial Asian session on Monday.
In doing to 61.8% Fibonacci retracement level of $1,519 will be the first, and the key, to watch for, a break of which could escalate the recent recovery towards late-September high near $1,535.
It’s worth mentioning that 12-bar Moving Average Convergence and Divergence (MACD) is indicating a bullish signal and hence further upside to the key resistance seems quite an expected outcome.
Should there be further upside beyond $1,535, $1,550 and September month high close to $1557/58 will appear on buyers’ radar.
Meanwhile, a downside break below 50% Fibonacci retracement level of $1,506 highlights the importance of a 200-bar Simple Moving Average (SMA) level of $1,498 and a monthly rising trend line around $1,484.
During the metal’s declines under $1,484, $1,478 and the previous month low surrounding $1,455 could lure sellers.
· Gold: Under pressure around $1513 amid mixed trade headlines
Mixed sentiment concerning the US-China trade deal seems to limit the market’s recent momentum, which in turn stops gold from extending its latest run-up. However, holidays in Japan and a lack of major data/events limit the yellow metal’s moves as it makes the rounds to $1,513 during early Monday.
Moving on, the global economic calendar is almost quiet with no major data/events in the spotlight. However, trade/Brexit headlines will offer near-term trade direction.
In addition to a monthly falling trend line, at $1,518, late-September high surrounding $1,535 and $1,557 become key upside barriers to watch during the safe-havens’ rise. Meanwhile, a five-week-old rising support line, at $1,485, could restrict near-term declines, a break of which could recall October low near $1,491 on the chart.
· Among other metals, silver rose 0.1% to $18.11 per ounce, platinum was up 0.7% at $952.71 per ounce, while palladium rose 0.5% to $1,814.21 .