Gold Consolidates 1-Month Highs After Monday’s Rally

Gold is trading down but in consolidation mode, however, silver and copper are posting gains, but gains will be short-lived.
Mauricio Carrillo
Gold Consolidates 1-Month Highs After Monday's Rally
Gold Consolidates 1-Month Highs After Monday’s Rally

Gold is trading in consolidation mode around 1,300 after rallying on Monday from 1,285 to trade as high as 1,303 on Tuesday, its highest level since April 11.

Risk aversion was the theme of Monday as the market digested US-China trade war developments; however, moves are tempered today as Trump said China and the United States would sign a deal when the time is right.

Silver found support at 14.60, and it is now trading at 14,80. On the other hand, copper found support around 2,700, but the unit looks very bearish. Dollar index extends its bounce at 97.00 and trades at 97.50.

Mixed economic data

Economic reports are adding pressure to the market as mixed numbers have been released on Tuesday. First, the German CPI reported a number in line of expectations. The HICP in Germany rose by 2.1% annually, as expected.

Later on the European morning, the English ILO unemployment rate declined to 3.8% in the three months to March, from 3.9% in the three months to February. However, the claimant count rate in the United Kingdom reported 24,700 new claims, more than the 24,200 anticipated by the market.

ZEW Economic Sentiment in Germany fell hard to -2.1, against the rise from 3.1 to 5.0 expected by the market. Industrial production in the Eurozone declined less than expected.

In the United States, Import and Export price indexes reported weaker than expected numbers in April.

Gold negative on Tuesday, but in consolidation mode

XAUUSD daily chart Gold May 14

Gold is trading down on Tuesday, but the move is responding to a consolidation pattern after the latest rally performed by gold against the Dollar on Monday.

XAU/USD jumped 1.07% on Monday from the 1,280 to trade as high as 1,301. Then, on Tuesday, the pair extended gains to trade as high as 1,303, its maximum price since April 11, where the unit found resistance and was contained.

Currently, XAU/USD is trading 0.08% negative on the day at 1,298. Technical indicators are showing symptoms of exhaustion, but the bears are not strong enough to take the pair down-.

Jeffrey Halley, senior market analyst at OANDA, highlighted in a recent article that people are looking for safe havens right now as they are waiting for the dust to settle.

“Prices could further rise to $1,310-$1,312 if stock markets end lower. But, any sudden breakthroughs in the trade stand-off possibly could see investors stampeding for the exit as fast as they arrived.”

Any downside movement will find 1,280 and 1,266 as supports. Be aware of stop losses triggering.

Silver extends bounce from 14.60

XAGUSD daily chart Silver May 14

Silver is trading positive on Tuesday after bouncing on Monday. Risk aversion has finally lifted the metal; however, any gain will be small and limited to current ranges.

XAG/USD is currently trading 0.33% positive on the day around 14.80. The pair looks bullish in the short term, but any upside move will be contained by the 20 and 200 day moving averages that are located at 14.88 and 14.94 respectively.

However, if the pair clears up those two levels, next resistance will be at 15.10. To the downside, 14.60 is the current support.

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