Gold Holds Above $1300 Price Handle despite US Greenback’s Strength
Gold prices on Friday steadied below a one-month high hit in the previous session and were on track for a second straight weekly gain amid concerns over U.S.-China trade dispute. Early morning session saw some sell off activity that resulted in pair testing $1300 handle post hitting high of 1312.90 during early North American market hours. However the XAUUSD pair is expected to remain above $1297 price handle across Friday even if later sessions see some sell-off activity in case U.S-China tariff related updates end in favor of US dollar. Investors are keeping a close tab on trade tensions between the world’s top two economies and if the United States imposes tariffs on Chinese goods, gold is expected to move back above $1310 price handle. U.S. President Trump has made up his mind to impose “pretty significant” tariffs on Chinese goods, an administration official said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tensions.
As tensions get higher, investors continue to view gold as an excellent hedge against a possible equity/currency market tumult if trade war escalates beyond the status quo. Silver is trading on positive note similar to gold, XAGUSD pair has managed to remain above $17 price handle despite strength of US dollar and is expected to continue above $17 price handle as trading session closes for the week.
Gold Hits Two Week High On US-China Trade Tensions
Gold hit a two-week high on early hours of Thursday, supported by a weaker dollar and trade worries between Washington and Beijing, even as the U.S. Federal Reserve forecast a slightly faster pace of interest rate hikes this year.
While Fed Rate decision gave U.S Greenback a boost in momentum, the boost faded shortly as reports hit the market that President Trump was preparing to put tariffs on billions of dollars of Chinese goods as soon as Friday which greatly impacted US dollar’s momentum giving dollar bears momentum against major global currencies. XAUUSD pair hit a high of $1309.52 and is currently trading at $1308 price handle. Gold is expected to continue its bull run and may see greater highs as Analysts predict a further surge in dollar value if ECB confirms QE tapering during its meeting later today.
The U.S-Chinese trade war tension has taken center stage for US Greenback denominated instruments and current proceedings of geopolitical and global economic events have given all major safe-haven instruments a boost in value. Silver one of the most common safe-haven instrument also saw headway from this decline in the dollar as XAGUSD pair crossed above $17 for the first time in last 50 days. XAUUSD pair is currently trading at $17.15 after hitting the day’s high at $17.175.
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