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Gold Price News and Analysis
- Spot gold continues to slump as USDCNH drives the move.
- Gold support at $1,204 may hold.
The DailyFX Q3 Gold Forecast is now available to help traders navigate the market.
Gold Price Analysis - Chinese Yuan Weakness Continues to Hurt Gold Bulls
The price o f gold has fallen nearly $150/oz. since touching a $1,365/oz. high just over three months ago as tightening US monetary policy and a weak offshore Chinese Yuan continue to hurt bullish gold investors. The CNH-gold correlation remains tight and is unlikely to be broken in the short-term, especially with tighter US monetary policy weighing on both asset classes. The Chinese Yuan is around 9% lower since US President Donald Trump ramped up trade tariff rhetoric, negating the overall effect of Trump's tariffs on the Chinese economy. The ongoing US-China trade war will continue to be a driving force for both the Chinese Yuan and gold.
Special Report: US-China Trade War Enters New Phase amid Yuan Depreciation.
Gold Remains Stuck in a Technical Downtrend
We have noted before that gold is stuck in a downtrend started on April 11 when the precious metal traded at a high of $1,365/oz. The next level of support remains at $1,204/oz. and is likely to hold in the short-term and this roughly coincides with the politically sensitive USDCNH level of 7.00. USDCNH currently trades at 6.8400. If USDCNH holds below 7.00, gold may get a short-term boost, something that would please gold investors who remain overwhelmingly long of XAU.
Spot Gold (XAU) Daily Price Chart (February 2017 - July 31, 2018)
The latest IG Retail Sentiment Indicator shows that traders are 87% net-long of the precious metal , a bearish contrarian sentiment indicator.
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--- Written by Nick Cawley , Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
