Gold Extends Decline and Heads to 1,266 Amid Firm Dollar and Risk Appetite

Gold and other precious metals are trading negative on Tuesday as investors are welcoming the decision of Donald Trump to ease restrictions against Huawei. Dollar index up, pressuring metals to the downside.

Silver is losing all Monday gains and testing 14.40 support. Copper is approaching to the 2.700 critical support as technical conditions worsened for the pair.

Palladium remains in a range between 1,310 and 1,340 as technical studies are mixed in the daily chart; while platinum is trading sideways on Tuesday as investors took a breath after four days of drops.

US stocks are trading on recovery mood after Trump approves a truce with Huawei and the dollar index has accelerated to trade above 98.10, May highs.

Trump approves a three-month truce with Huawei

US President Donald Trump has approved a suspension of the restriction approved against Huawei this week as the government doesn’t want to hurt American companies and to allow them to do a plan accordingly. Another example of talk before you think in Trump’s behavior.

Remember that Huawei invested 11 billion dollars in the United States just in 2018, and has ties with several companies in the country. The truce will end on August 19 this year.

Gold down to 3-week lows

Gold is trading down for the sixth day in a row as investors are reluctant to invest in the metal as weak euro and pound are underpinning a firm dollar. So, no matter if risk aversion is on the table, the dollar is not willing to give up any gain.

In fact, DXY is trading positive on Tuesday with the unit reaching its May highs around 98.15, and it is not giving any reason for bears to believe the index will go down anytime soon as the 97.80 support remains firm.

Back to gold, “the lack of safe-haven demand, higher yields and increased demand for risky assets should keep a lid on gold prices today,” as FX Empire analyst said in a recent note.

Exactly how Saxo Bank commodity strategist Ole Hansen thinks. He does believe that “right now the only safe-haven out there seems to be the dollar, which has been moving higher against most currencies.”

Currently, XAU/USD is trading 0.50% negative on the day at 1,270, reaching its lowest level since May 3 and heading towards the critical support at 1,266.

It is not sure that the move has the strength to break below that level, but in case it does, the next support will be found at the 200-day moving average at 1,255. Below there, 1,240 and 1,210 are the levels to watch.

Silver tests 14.40 area

Silver is trading negative on Tuesday amid firm dollar and its positive correlation with gold. Right now, the pair is testing the 14.40 area after losing all that it recovered on Monday.

XAG/USD is currently trading 0.40% negative on the day at 14.39. Technical studies suggest more room for drops with 14.20 as the first support located, and 14.00 as the critical level before stop loss triggering.