Gold Technical Analysis: Can it Hold?

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With the markets returning to the full nature of their work after a prolonged US holiday for the Thanksgiving, and investors avoided trading, gold investors are questioning the success of it holding in the face of the USD strength and the return of investors' risk appetite amid optimism of resolving the trade dispute between the United States and China. At the end of last week's trading, gold tried to rise, but gains did not exceed $1466 an ounce before settling around $1459 dollars an ounce at the time of writing. The yellow metal is still under downward pressure. It will not have a chance to vigorously correct higher without the return of trade and political tensions around the world. Most notably, the two sides of the world trade war failing to reach an agreement that would satisfy the markets. Also a failure to achieve a majority in the upcoming British elections, and thus a suspended parliament, which will mean more time and uncertainty about the future of Brexit.

Forex markets reacted positively to signs that US-China trade talks will survive any diplomatic repercussions due to President Donald Trump's decision Wednesday to sign the Human Rights and Democracy Act in Hong Kong. The law threatens Hong Kong's special trade situation as well as sanctions on some Chinese officials if Hong Kong's independence is undermined.

The decision drew an immediate condemnation from Beijing as well as threats of retaliation, which the Global Times predicted could see some US lawmakers and diplomats, including Secretary of State Mike Pompeo, banned from traveling to China. China may view Hong Kong as a separate issue for trade talks.

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According to the technical analysis of gold: I do not change in my technical view for gold prices, which is still under bearish pressure of a downward correction since it abandoned the $1500 psychological resistance. Continued pressure may support gold prices towards stronger support areas, and the nearest ones are currently at 1452, 1443 and 1430 respectively. On the upside, the nearest current resistance levels are 1463, 1475 and 1490 respectively. The continued USD strength and investors' risk appetite will support the strength of upcoming selling on gold.

As for the economic calendar data today: Gold will react to the release of the manufacturing PMI results for Japan, China, the Eurozone, Britain and the United States. Then the comments of European Central Bank Governor Christine Lagarde.

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Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.