XAU/USD Positive Again Amid Risk Aversion, Disappointing Retail Sales

Gold is trading positive on Wednesday amid risk aversion. Silver and other metals are mixed. The market is waiting for trade war clarifications.
Mauricio Carrillo
XAU/USD Positive Again Amid Risk Aversion, Disappointing Retail Sales
XAU/USD Positive Again Amid Risk Aversion, Disappointing Retail Sales

Gold is trading positive on Wednesday as investors are still reluctant to take risks amid the trade war between the United States and China. Also, retail sales in the US reported poor numbers.

Other precious metals are trading mixed with silver posting small gains, copper consolidating levels just above 2.700 and Palladium and Platinum posting losses.

Risk aversion mandatory

Risk aversion remains over the table on Wednesday as investors are not happy with the development in the trade war between the United States and China. They are waiting for more clarifications.

“As long as there is no decision made that there will be no further imports duties on Chinese goods, you cannot say the worst is over,” said Quantitative Commodity Research analyst Peter Fertig to CNBC.

“There have been flows out of equities into safe havens,” he added.

Poor economic data

Retail sales in the united states decline 0.2% between February and March, against the 0.2% rise expected by market. Ex-autos, retail sales rose just 0.1%, not 0.7% anticipated.

In Canada, the CPI remained at a 2.0% increase rate, as expected, but the Bank of Canada Consumer Price Index rate declined to 1.5% yearly inflation from 1.8% in March and expected for April.

Previously, China retail sales reported a 7.2% increase in April, lower than the 8.6% expected by market. Industrial production was weak too with a 5.4% growth in April, less than the 6.5% rise expected.

XAU/USD recovers its upside move after consolidation time

XAUUSD daily chart gold May 15

After a consolidation period on Tuesday, Gold has resumed its uptrend from 1,293, intra-day low, to trade above the 1,300 area on Wednesday.

Risk aversion and money flows to safe havens such as gold are motivating the pair. Also, James Hyerczyk, FX Empire analyst, said in a recent article that the gold move could be motivated by US military moves in the Middle East.

“Gold is reversing earlier weakness that was fueled by optimism surrounding trade talks between Washington and Beijing, which soothed investor concerns, boosting Treasury yields, global stocks, and the greenback.”

Currently, XAU/USD is trading at 1,300, 0.25% positive in the day. The pair is consolidation levels above the 50-day moving average at 1,292.

Technical conditions suggest more room for the upside with the 1,310 resistance in sight. To the downside, please check the mentioned 1,290 area, 1,280, and finally 1,266 as supports.

Silver adds small gains but remains in range

Silver is trading positive on Wednesday, but the gains remain little as investors are reluctant to take one way or another before clarifications in the trade war between the US and China.

XAG/USD is trading 0.10% positive at 14.80 with the unit contained by the 20-day moving average at 14.87 and the 200-day MA at 14.94. The chart looks mixed.

Copper consolidates lows around 2.7000

Copper is trading slightly positive on Wednesday, actually its second day with gains in a row, but the truth is that it is only a consolidation phase following the significant 2.21% decline on Monday.

With the pair posting 0.10% gains on the day at 2.7180, the chart looks bearish, and a test of 2.7000 looks inevitable.

Palladium accelerates its drop and testes 840.00 area

XPD/USD is trading back below 1,320 on Wednesday after the unit accelerated to post a 2.35% decline in the day. Palladium is currently trading at 1,305, fresh intra-day lows.

The chart looks bearish with technical indicators suggesting more drops and a possible test of May 9 lows at 1,268 and the 200-day moving average at 1,240.

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