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Gold fails to recover above $1280

21 May 2019

The past few days have certainly not been kind to Gold and this continues to be reflected in the bearish price action.

Conflicting signals over the direction of the US-China trade talks have sent investors rushing towards the Dollar – ultimately weighing heavily on Gold. Although bulls are clearly losing the battle as prices sink towards $1274, the war still rages on.

It must be kept in mind that the sentiment pendulum could easily swing in favour of bulls this week, if trade tensions intensify and fears over slowing global growth accelerate the flight to safety. With Gold still supported by core themes in the form of a cautious Federal Reserve and speculation over a possible US rate cut in 2019, the precious metal remains shielded by extreme downside shocks.

Looking at the technical picture, sustained weakness below $1280 is seen opening a path towards $1268.50 in the short to medium term. Alternatively, a breakout above $1280 may offer bulls another chance to challenge the $1300 psychological level.

Currency spotlight – USDJPY 

Escalating US-China trade tensions have not only strengthened the Japanese Yen but also the Dollar which is seen as a safe-haven asset. This development has transformed the USDJPY into a fierce battleground for bulls and bears with prices trading marginally above 110.00 as of writing. Should the Dollar win the current tug of war against the Yen, the USDJPY is seen pushing higher towards 110.70 in the near term. Alternatively, a failure for bulls to maintain control above 110.00 is likely to open a path towards 109.00.

Commodity spotlight – WTI Oil 

WTI Oil has pushed higher on the daily charts thanks to geopolitical tensions in the Middle East. While bulls seem to be in the driving seat, there seems to be a strong resistance at $64.50 and $66.70, respectively. Should prices fail to break above these two key points, WTI is seen sinking back towards $60.00 in the medium term. Alternatively, a scenario where $66.00 is conquered is likely to open the gates towards $70.00 – a level not seen since October 2018.

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