Gold has been extremely volatile and corrective recently residing above $1276 area with a daily close. Though the price has been expected to rise to new highs.
Despite the US-China trade tensions, gold as safe heaven has suddenly dived down. This drop slightly hammered the market sentiment. Now, it's quite hard to discern any signals for spot gold as it failed twice to break a resistance at $1,287 per ounce. However, gold seems to have found a base around $1,270. Hedge funds and money managers sharply reduced their net long positions in COMEX gold in the latest week.
Investors have increasingly looked for safe havens in recent days. The CBOE Volatility Index, a gauge of the fear factor in markets, hit a two-week high on Wednesday amid reports that Beijing was preparing to limit the export of rare earth elements in its attempt to strike back at the US. The rare earth elements include a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment.
Trade tensions between the US and China escalated sharply earlier this month after the Trump administration accused China of having "reneged" on its previous promises to make structural changes to its economic practices. U.S. later slapped additional tariffs of up to 25% on $200 billion of Chinese goods, prompting Beijing to retaliate.
As of the current scenario, certain bearish pressure observed recently. Throwback of the price towards $1276 again is currently expected to inch up after getting stuck in the support area between $1265 to $1276 in the coming days. Though the overall price action is volatile and corrective being above the strong psychological level. It is expected to push higher towards $1300 again.
SUPPORT: 1265, 1276
RESISTANCE: 1290, 1300
BIAS: BULLISH
MOMENTUM: VOLATILE
