Gold Up Amid US-EU Trade Tensions; Copper To Test 10-Month Highs
Precious metals such as Gold and Silver are trading positive on Tuesday as investors are selling the US Dollar index. They are also digesting news coming from US and the European Union about a new trade tariff crisis.
The US Dollar index is trading at April lows, while gold is consolidating levels above 1,300 and Silver is conquering levels above the 20-day moving average.
Trump selects its new contender on the Trade-Wars games
Drums of trade war between the European Union and the United States as Donald Trump said the US is considering 11 billion dollars worth of retaliatory tariffs in response to illegal subsidies from the EU to Airbus.
The decision came after the World Trade Organization ruled over subsidies to the aerospace firm.
In response, the European Union hit back saying that US tariff threat is “exaggerated” and hinted the union is ready to retaliate if needed.
A European Commission spokesman affirmed that the WTO should be the only one authorized to determine retaliation.
“The EU is confident that the level of countermeasures on which the notice is based is greatly exaggerated. The amount of WTO authorized retaliation can only be determined by the WTO-appointed arbitrator.”
Dollar index down for the second day
The DXY is 0.13% negative on Tuesday as investors are on risk aversion mode following tariff threats from the US. With the unit moving at 96.90, the DXY is extending losses from the 97.50 level traded on Monday.
Indicators are turning lower in the daily basis. Next supports are at 96.80 and 96.60, 20 and 50 moving average levels. A weak dollar opens the door to a rally in commodities.
As James Hyerczyk, FX Empire analyst said in a recent article, “It’s hard to believe that U.S. Dollar investors have just abandoned the greenback’s appeal as a safe-haven asset.”
“So we’re going to attribute the weakness to technical factors and position-squaring ahead of the release of the minutes from the U.S. Federal Reserve monetary policy meeting on Wednesday,” Hyerczyk said.
Gold extends gains above 1,300
Gold is trading positive for the second day as investors are abandoning the US Dollar and betting on commodities and safe havens such as gold. Weak stocks and dollar are fueling the metal.
Currently, XAU/USD is trading 0.60% positive in the day as it is moving around 1,305. Its highest level since March 28.
The pair is now facing the 50-day moving average at 1,307 and technical studies are suggesting more gains in the short term.
Above there, next resistance lies at 1,325 and 1,330.
Silver breaks above the 20-day moving average
Silver is trading positive for the second day in a row as risk aversion is taking the market due to political tensions.
XAG/USD just broke the 20-day moving average at 15.28, and it is heading to 15.50, where the 50-day MA is right now. Above that, please check for the 15.65, March 21 high.
Copper breaks above 2.9455, ready for fresh multi-month highs
XCU/USD is extending its bounce from 2.8800 performed on Monday, and it is now breaking above the 2.9455 earlier on the day and it is testing 2.9550 area.
The break above the 2.99455 is significative as this area acted as a strong resistance last week. Above there, please check February 25 highs at 2.9700 and 2.9810, highs since June 2018.