Gold Advances Amid Risk Aversion, Other Precious Metals Down

Gold extends gains for the fourth day in a row while other metals are falling. Risk aversion took the market.
Mauricio Carrillo
Gold Advances Amid Risk Aversion, Other Precious Metals Down
Gold Advances Amid Risk Aversion, Other Precious Metals Down

Gold is trading positive on Wednesday for the fourth trading day in a row as risk aversion has taken the market amid the United States and China trade conflict.

However, other precious metals such as silver, palladium, platinum and even copper are extending losses on Thursday.

Besides US-China trade-war talks, the market is also watching the economic calendar with the CPI in China as the next big event on Thursday. Pay attention to the GDP report in the United Kingdom and inflation numbers in the US on Friday.

China backtracked deal with the US

China seems to have revised months of negotiations between them and the United States as the superpower backtracked the trade deal with the US, according to sources of White House and private sector individuals.

A diplomatic cable from Beijing with a nearly 150-page draft trade agreement with amendments that undermined core US demands arrived on Friday. It would be the reason for Trump’s tweet on Sunday.

The changes would affect intellectual property, trade secrets, forced technology transfers, competition policy, currency manipulation, and financial services.

That would force president Trump to move forward with more tariffs to China as an attempt to get them back to what both parts agreed previously.

The market is digesting that as proof that a trade deal between the United States and China is not near to be reached. Risk aversion took the market and flows are going to safe havens such as gold.

Gold jumps to 3-week highs

XAUUSD daily chart May 8

Gold is taking profit of the risk aversion environment due to the trade conflict between China and the United States. The metal is logging its fourth positive consecutive trading day.

Since May two lows at 1,266, the pair recovered near 2.0% in four days to trade as high as 1,290, today’s intra-day high.

According to Oanda senior analyst Jeffrey Halley, current move catalysts will be, but the momentum remains the same. “Gold is being supported by risk-aversion buying at the moment. However, there is no change in the underlying momentum in overall sentiment, which seems to be soft.”

Currently, XAU/USD is trading 0.44% positive on the day at 1,289. Technical studies suggest more room for the upside with the 50-day moving average at 1,293 as immediate resistance.

Above that, the unit would face April 10 highs at 1,310 as the next selling region and then March 25 maximums at 1,324.

Silver trades sideways just below 15.00

XAGUSD daily chart May 8

Silver is trading sideways just below 15.00 as the metal is waiting for developments in the China-US trade conflicts. Risk aversion is also affecting XAG/USD with back and forth movements.

XAG/USD is currently trading at 0.16% at 14.93. It could be seen as positive, but the reality is that the metal is trapped in a small range between 14.90 and 15.00 on Wednesday.

“At this point, it looks as if the $14.85 level is trying to offer support, but really at this point I’m not willing to short this market until we break through the falling wedge looking at the chart,” Christopher Lewis, FX Empire analyst said in a recent article.

“If we were to break above the top of the falling wedge, it’s very likely that we will try to reach the top of that wedge, the $16.00 level,” Lewis added.

To the downside, 14.80 and then 14.60 are the levels to watch.

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