Gold Falls Amid Risk Appetite Due US-Mexico Trade Deal

Gold and silver are trading down amid risk appetite due the new deal signed between the United States and Mexico.
Mauricio Carrillo
Gold Falls Amid Risk Appetite Due US-Mexico Trade Deal
Gold Falls Amid Risk Appetite Due US-Mexico Trade Deal

Gold and silver are trading down on Monday as investors are leaving precious metals behind due to risk appetite.

The market sentiment has improved following news that the United States and Mexico signed a trade deal that will avoid the imposition of tariff in Mexican goods.

The announcement has improved risk appetite with equities and dollar moving higher. Then, gold and other metals are suffering the consequences.

Metals round-up

Gold is trading down on Monday with the unit losing three days of gains performed last week. XAU/USD is currently testing the 1,325, now support.

Silver is also moving lower amid risk appetite and dollar strength. XAG/USD is almost 2% down in the day after extending loses below the 15.00 area and breaking the 200 and 50 days moving averages.

Copper, on the other hand, is trading higher as the unit is moving in a consolidation pattern around 2.6290 after finding support at 2.6000.

Platinum is falling on Monday as the unit finally broke below the 800.00 area today. XPT/USD is now testing levels below the mentioned 800.00 level at 795.00.

Palladium remains subdued by the 50-day moving average at 1,362.00 as the unit is moving sideways on Monday. The 200-day moving average is still supporting the long term uptrend.

New deal between the United States and Mexico

Experts are welcoming the new agreement between the United States and Mexico about trade and migration signed in the weekend.

Mexico agreed to increase measure to control illegal immigration in the US from the Mexico border. The White House gives up on its tariffs idea.

In a tweet published Friday night, the US president Donald Trump said that the agreement was reached and the tariffs were indefinitely suspended. He also said that more details would be released soon.

“I am pleased to inform you that The United States of America has reached a signed agreement with Mexico,” Trump said in the Tweet. “The Tariffs scheduled to be implemented by the US on Monday, against Mexico, are hereby indefinitely suspended. Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border.”

He added that “this is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States. Details of the agreement will be released shortly by the State Department. Thank you!”

So, what’s going on with gold?

As Jameel Ahmad, global head of currency strategy and market research at online forex trading broker FXTM, said to CNBC, “the U.S.-Mexico trade breakthrough has improved risk appetite for investors, as it shows a deterioration in trade war fears.”

“Assets such as gold have fallen. After what has been a very good couple of weeks for traditional safe haven assets,” Ahmad added.

Gold falls below 1,330

XAUUSD daily chart June 10

Gold opened the week with losses after the market welcomed the news on the new deal. Risk appetite took the market, and the Dollar index is also joining the environment.

In this framework, XAU/USD is losing more than 1.0% on Monday with the metal extending its rejection from near 14-month highs at 1,350.00 reached on Friday.

On Monday, gold is falling 1.05% so far to break below the 1,330 support and to price at 1,325, a new short-term support that the unit is testing right now.

Technical conditions suggest that a correction is on the way in the middle term. Below the 1,325 level, next support comes at 1,310. Below there, check for the psychologic 1,300 and the 1,280 area. Then, a critical frontier identified at 1,266.

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