Gold Price Analysis: XAU/USD bulls struggle to retake controls around $1,930
- Gold begins the week mostly unchanged, keeps Friday’s recovery moves from $1,916.
- A recent blow to equities favor the buyers, sellers fear US dollar strength.
- Sino-American tension escalates, Brexit pessimism also darkens.
- Labor Day Holiday in America will restrict market moves, China trade balance can offer immediate direction.
Gold picks up the bids near $1,9.35 during the initial Asian trading on Monday. In doing so, the yellow metal keeps Friday’s recovery moves amid the negative performance of the S&P 500 Futures. Though, buyers stay cautious as a lack of a major catalyst, coupled with the US dollar strength, question the bullion’s upside.
Brexit, US-China jitters favor the bulls…
Given the recently worrisome headlines concerning Brexit, not to forget the on-going tension between the US and China, global trading sentiment sour at the week’s start.
While headlines from the UK suggest a tough road to Brexit, the Trump administration’s blacklisting of Beijing backed SMIC adds fuel to the Sino-US tussle.
British PM Boris Johnson set October 15 deadline to have a trade deal with the European Union (EU), failing to respect the same will result in a no-deal Brexit. Additionally, the Financial Times (FT) came out with the news suggesting that the UK is planning new legislation that will override key parts of the Brexit withdrawal agreement.
Read: Brexit: trade talks on knife-edge, sterling vulnerable to start the week
It should be noted that the global equities witnessed a blow during the last week, after marking a stellar run-up, as China warned to cut the US debt buying while also threatened American chipmakers while announcing a five-year plan to build the infrastructure to be self-dependant.
Elsewhere, the coronavirus (COVID-19) numbers from the US, Australia, China and Japan are receding off-late while the global pharmaceutical companies are rushing for a vaccine.
Furthermore, Friday’s upbeat US employment data favors the ruling Republican party and suggests a break of the stimulus deadlock, which in turn can offer additional US dollar strength and weakness to gold prices.
Against this backdrop, S&P 500 Futures declines 0.50% to 3,400 while extending Friday’s losses by the US equities.
Moving on, the Labor Day Holiday in the US is likely to restrict the market moves. Though, China’s Trade Balance and risk catalysts may keep the traders entertained.
Technical analysis
Friday’s daily candle suggests traders’ indecision below 21-day EMA, currently around $1,943. However, bulls remain hopeful unless the quote slips below the 50-day EMA level, at $1,905.30 now.