- Gold (XAU/USD) prices drop but are still above $1,700
- Renewed US/China trade war could offer support to bullion
- Near term, resistance could be around $1,720
On Tuesday, gold prices inched lower as investor sentiment for riskier assets seemed to grow ahead of emergence from the COVID-19 lockdowns.
The tension of US trade war with China Could offer support to gold prices
In the US, various states have indicated that they will reopen their economies with other countries such as Finland and Italy also resuming activity after several weeks of lockdown. On Monday, there was a weak risk sentiment in equity markets following comments by US President Donald Trump that he might impose sanctions on China. However, this could not support gold prices, and now the focus for gold investors is the lifting of coronavirus lockdowns and reopening of economies to provide support for bullion.
The fundamental haven bid for the yellow metal will likely continue considering the coronavirus has had devastating effects that have pushed the economy to blink of recession.
Gold price analysis
There is still an appeal on for gold as a haven considering it can be used against currency debasement and inflation. However, prices are still restricted to a narrow range despite breaking below its previous downtrend. Based on gold price action this week, it seems like the market is adopting a neutral stance with resistance in the near-term expected to form at $1,720 with the next level being $1,740.
Support could come at around $1674.30 per gold ounce for long term buyers and a psychological level expected at $1,600. Interestingly, for now, gold doesn’t seem like it will test the support levels as it has consolidated above $1,700 mark. At the time of writing, gold prices were down 0.62% at $1,702.70.
Time : 05-05-2020
Pivot : $1702.84
Technical View : Long above1705.65
Target : $1709.69, next 3 targets $1714.01, $1720.89 and $1727.68
Technical View : Short below 1699.38
Target : $1695.81, next 3 targets $1691.38, $1684.61, $1673.31
Comments : Weak Bearish sentiment
Last Price : $1702.70