Gold Softening on Thursday
Despite the ongoing, heavy selling in the US Dollar, gold prices are struggling today. The futures market has slipped around 1% so far on the day, reflecting a market that is likely chasing gains elsewhere with big moves seen in the FX space today. EUR and JPY have both seen explosive gains against the Dollar and with traders bracing for the ECB decision today and the NFP release tomorrow, there could be further fireworks in store for Forex traders.
Trade War Developments
The selling in gold today likely reflects the latest developments in the trade war, too. Trump announced yesterday that some tariffs (sanctioned earlier this week) on Canada and Mexico will now be paused for a month. In particular, tariffs on automakers have been suspended, to allow room for negotiation. The view now seems to be that Trump will continue to carrot-and-stick with trade tariffs until he achieves his aims which perhaps lessens the likelihood of the trade war escalating. If this viewpoint becomes more entrenched, safe-haven demand for gold prices could reduce further near-term.
US NFP Tomorrow
Looking ahead tomorrow, the big focus will be on the latest US labour market data. With Fed easing expectations creeping higher recently, a weak showing tomorrow should further strengthen those expectations. In this scenario, gold prices look likely to move higher against a fresh sell off in USD. However, the rally could be curtailed if traders use the data to chase gains in other markets, keeping attention off gold prices for now.
Technical Views
Gold
The rally in gold off the 2,859.15 level has stalled for now and there is an early risk of a lower high forming against the current YTD highs while this recent peak holds in place. 2,859.15 is the next support level to watch which, if broken, opens the way for deeper move and a test of the 2,789.40 which is the key pivot in gold.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.