In Asian trading on Friday, spot gold gave up early gains and fell back below $1,950, while silver continued to fall.
Gold rallied strongly yesterday, continuing its rally from a low of $1,912. It surged more than $50 at one point, touching as high as near 1966 before closing just above 1950.
For now, gold is locked in a long-short standoff, and while the fundamentals for holding gold remain largely unchanged, a profit-taking mentality at high levels is dampening the bullish rally.
For the rest of the session, the focus will be on U.S. retail sales data, known as the “terror data,” and investors need to watch out for unexpected news in the U.S. and China.
On August 13, US Secretary of State Mike Pompeo announced that the US Center would be required to register as a “foreign mission”. Reuters said it was the latest sign of deteriorating relations between Washington and Beijing.
In addition, during a visit to Slovenia on August 13, Pompeo reiterated his call not to build 5G networks using equipment from The Chinese company Huawei. During a meeting with Slovenian leaders, Pompeo signed a joint statement on “5G clean Network Security,” excluding untrustworthy carriers.
In addition to cultural and technological conflicts, the military tussle between China and the United States has been escalating recently. Ads-b signals showed that a US Navy EP-3E reconnaissance aircraft (AE1D91) appeared in the northern airspace of the Taiwan Strait at about 8am on August 14 and soon intruded into the airspace of the Taiwan Island, according to the platform of the Strategic Situational Awareness Program in the South China Sea. If true, this would be a further American provocation against China. But do not rule out after being intercepted, the signal disorder.
On the night of August 13, China’s Zhejiang Maritime Safety Administration issued a navigation warning that “live-fire training” would be held in waters near Baisha Island, Taizhou, from August 14 to 15, and gave the scope of the exercise.
According to the zhejiang maritime safety administration, zhejiang maritime police 0562, on August 14, solstice on August 15, every day from 0600 to 1200 hours, in 28-50.75n 121-41.75e, 28-50.42n 121-50.42e, 28-42.47n 121-46.43e (2000 national geodetic coordinate system) within the four points line range, live fire training, prohibit entry.
Earlier, Zhang Chunhui, spokesman for the PLA Eastern Theater Command, said that the PLA eastern Theater Command has recently sent troops from multiple services to continuously organize practical exercises in the Taiwan Strait and both ends of the North and south to further test and improve the joint combat capability of multiple services.
Zhang chunhui pointed out that the above exercises are necessary actions in response to the current security situation across the Taiwan Straits and the need to safeguard national security and sovereignty.
As for the outlook for gold, Leigh Goehring of Goehring & Rozencwajg Associates believes the correction may not be over yet, but a further fall would present a very good buying opportunity. A pullback to $1,500 – $1,700 an ounce this year is not out of the question, Goehring said.
Edward Moya, senior market analyst at Oanda, said the gold market’s previous rollercoaster ride may not be over yet and volatility will continue in the near term due to the performance of bond yields. “Gold’s volatility will continue, but the market is still looking up to a new record.”
On the daily chart, the DOLLAR index.DXY was trading around 93.30 after two days of small losses as it tried to stabilize. The daily MACD red kinetic energy column is gradually expanding and the KDJ random index is oscillating around the 50 level, indicating that the dollar may consolidate in the near future.
On the 4-hour chart, the DOLLAR index.DXY did not break below its previous low of 92.50 and is still trading above the 93 mark. The MACD green momentum column gradually weakened, and the KDJ random index approached the 50 level above, indicating the dollar bearish momentum weakened, short term or rebound.
On the daily chart, gold after yesterday’s rally high consolidation, is hovering near the 20 – day average. The daily MACD green momentum column expanded, with KDJ stochastic easing around 50, indicating gold bearish momentum remains, but the decline may slow.
The 4-hour chart shows gold rebounding from a low of $1,862 to a rally near its 100-date average of 1966. The MACD red kinetic energy column is gradually expanding, and the KDJ random indicator continues to hit the overbought level, indicating increased bullish pressure on gold, short term or consolidation.
On daily charts, silver, which had rallied sharply in the previous two days, is trading above $27. The MACD green momentum column on the daily chart, with the KDJ random index holding above the 50 level, indicates weak bearish momentum for silver or continued consolidation.
On the 4-hour chart, silver has continued to rebound from an earlier low of $23.39 and has broken above its 50-period average. The MACD red momentum column expanded slightly and the KDJ random index hit an overbought level, indicating increased bullish momentum for silver and short-term caution for a pullback.
Fundamentals positive factors:
- During his visit to Slovenia on February 13, Pompeo reiterated his call not to use equipment from Chinese company Huawei to build 5G networks.
- The STATE Department on Thursday formally announced that Confucius Institutes across the United States must be registered as foreign missions. The decision is seen as adding to recent tensions between The us and China.
- Anthony Fauci, a top U.S. infectious disease expert, said on AN ABC program that he had serious doubts about Russia’s coVID-19 vaccine.
- Milos Vystrcil, President of the Czech Senate, plans to lead a delegation of about 90 people to Taiwan later this month. Zdenek Hrib, the mayor of Prague, the capital, has promised to go. This will be another visit to Taiwan following the recent visit by US Health Secretary Azar. In response, the Chinese Embassy in the Czech Republic issued a statement, pointing out that Vitzi’s visit to Taiwan is a blatant support for the Secessionist forces and separatist activities in Taiwan. The Chinese side has always been opposed to any form of official exchanges between countries with diplomatic ties and Taiwan.
Fundamentals negative factors:
- U.S. President Donald Trump announced on August 13 that Israel and the United Arab Emirates have reached an agreement on the full establishment of diplomatic relations. The situation in the Middle East is expected to ease.
- White House economic adviser Larry Kudlow said On Thursday that the Trump administration was pleased with China’s progress on its promise to buy American goods in the first phase of the trade agreement, suggesting that the deal would pass a preliminary review on Saturday.
- Data on Wednesday showed U.S. consumer prices rose more than expected in July, with core inflation rising at its fastest pace in 29 1/2 years and prices for goods and services rising across the board.
- The White House and top Congressional Democrats may not be able to reach an agreement on coronavirus aid without talks for a fifth day, U.S. Treasury Secretary Steven Mnuchin said Wednesday, amid a stalemate that has blocked access to aid for tens of millions of Americans.