After struggling to build on overnight up-move, gold held weaker below $1200 mark through the early European session on Tuesday. What should traders expect next?
18 September, OctaFX – Spot prices inched lower and failed to benefit from escalating trade tensions between the world’s two largest economies, especially after the latest US tariffs on around $200 billion worth of Chinese goods.
Currently, at 10%, the tariffs would rise to 25% in January 2019 and the US President Donald Trump has warned to pursue tariffs on $267 billion of additional imports if China takes retaliatory action.
Meanwhile, a combination of negative forces kept a lid on any meaningful up-move and exerted some fresh downward pressure on the commodity. The impending Fed rate hike was seen as one of the key factors weighing on the non-yielding yellow metal.
Gold Holds Weaker Below $1200
Adding to this, a modest US Dollar rebound further dented demand for the dollar-denominated commodity, with a positive opening across European bourses also doing little to revive the precious metal’s safe-haven demand.
Currently trading just below the key $1200 psychological mark, the commodity remains confined within a broader trading range held over the past three weeks and seemed to wait for a fresh catalyst before the next leg of a directional move.
Technical levels to watch
Immediate resistance is pegged near the $1204 area and is followed by the $1208-09 region, above which the metal is likely to aim towards testing the $1214-15 supply zone.
On the flip side, the $1193 level might continue to protect the immediate downside, which if broken is likely to accelerate the fall further towards $1188 intermediate support en-route the $1183 region.
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