Gold down as US and China Agree on a ‘Calm Attitude,’ Silver Extends Rally

XAU/USD advanced to break a short term resistance at 1,545 and to trade at highs since August 25 at 1,550. However, Feng remarks sent the metal down. The unit is now trading 0.24% negative in the day at 1,536.
Mauricio Carrillo
Gold down as US and China Agree on a 'Calm Attitude,' Silver Extends Rally
Gold down as US and China Agree on a ‘Calm Attitude,’ Silver Extends Rally

Calm attitude.

Hello FX Emperors! It is the latest trendy topic as China’s Ministry of Commerce spokesman Gao Feng said China wants to solve trade war with a “calm attitude.” It activated risk appetite, which sent gold down.

On the other hand, silver continues with its rally as investors are betting on the metal as an alternative of high gold prices.

China and the US maintain ‘effective’ communication

“We firmly reject an escalation of the trade war, and are willing to negotiate and collaborate in order to solve this problem with calm attitude,” Feng said Thursday, and for once, it seems to be true that both countries are willing to calm down the situation.

USD/CNY is performing its first negative day in the last eleven sessions as the pair is falling 0.20% on Thursday to its current 7.1493. However, the 7.1400 level looks like the new line in the sand for the China government.

If you believe in technical analysis, studies are now suggesting a possible correction, but technicals don’t matter here.

Feng also confirmed that the United States and China have effective communication. Coincidentally, US President Donald Trump used the “calm attitude” notion on his remarks about the Trade War earlier this week.

Gold lost all previous gains and trades down on Thursday

XAUUSD 1-hour chart Gold August 29

Gold is trading negative for the second day after investors welcomed Gao Feng commentaries on a “calm attitude” as a catalyst for risk appetite. Besides, the dollar index is trading positive for the second day.

Previously in the day, XAU/USD advanced to break a short term resistance at 1,545 and to trade at highs since August 25 at 1,550. However, Feng remarks sent the metal down. The unit is now trading 0.24% negative in the day at 1,536.

Feng words certainly motivated the movement, but it is also due to possible profit-taking ahead of the end of the month as Friday will be the last trading day of August.

Also, as FX Empire Analyst James Hyerczyk highlighted in a recent article, “with the market pricing in a 25-basis point by the Fed in September, and really only the yield curve inversion indicating a possible future recession, gold traders have no incentive to chase the market higher at current price levels, which leads me to believe the hedge funds may be taking a little off the top and booking profits.”

In the 1-hour chart, gold looks oversold with the MACD making a negative crossing. The unit is now testing the 1,533 support and consequently, the 1,530 area. Below there, the move could lead the cross to check the 1,525 level, which is the most significant support in the short term.

In the 1-day chart, technical studies are suggesting a possible correction in the XAU/USD with a test of the 1,500 area on the cards. The dynamic uptrend coming from November is acting as support at 1,504.

Below the 1,525 level, if you go short, then the XAU/USD would face support, or profit-taking, at the 1,510 area. Next, 1,500 and 1,490.

Silver extends gains to fresh highs since April 2017

XAGUSD 1-hour chart Silver August 29

Silver is trading positive for the fifth straight day as investors are betting on the XAG/USD as an alternative of high gold prices.

On the day, silver jumped to trade at highs since April 2017 at 18.65, but sentiment improvement sent the unit back down. It is currently trading 0.74% positive in the day at 18.50.

Technical studies are suggesting a short term correction that would drive the pair to the 18.40 area and then the 18.20 level.

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