Gold Price Stuck Between a Strong USD and Heightened Trade War Risk

Gold Prices, News and Analysis

  • Gold underpinned by a weak US dollar, but higher US interest rates are inevitable.
  • US-Iran trade sanctions are ratcheting up risk.

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Gold Playing a Waiting Game

Gold continues to be buffeted by a combination of a strong US dollar and increased trade war fears after the US unveiled its latest sanctions on Iran Monday. US President Donald Trump unveiled a wide-range of sanctions, including shipping, oil and the financial sector. The risk-off sentiment has given the precious metal a healthy bid – gold currently trades around $1,232/oz. – but the upside remains capped by the strength of the US dollar with another 0.25% interest rate hike – the fourth this year – fully expected in December. Today’s US Midterm Elections are also likely to influence the precious metal and keep trade muted in the short-term, but risk and USD strength remain the market drivers.

The daily gold chart shows recent highs up to $1,243.5/oz. – and Fibonacci retracement at $1,244/oz. – acting as short-term resistance if gold breaks above $1,236.6/oz. After this the July 9 lower high at $1,266/oz. comes into play. On the downside, the 20-day moving average at $1,228.8/oz. guards $1,215.4/oz.

Gold Daily Price Chart (November 2017 – November 6, 2018)

Gold Price Stuck Between a Strong USD and Heightened Trade War Risk

Gold Positioning: Retail Remain Long

IG Retail Sentiment shows 79.4% of traders are net-long gold, a bearish contrarian indicator. However the combination of current sentiment and recent changes gives us a mixed Spot Gold trading bias.

We are interested in your opinion and trading strategies for Gold. You canshare your thoughts, views or analysis with us using the comments section at the end of the article or you can contact the author via email at nicholas.cawley@ig.com or via Twitter @nickcawley1.

— Written by Nick Cawley, Analyst

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