Technical Analysis

Gold surrenders early gains to fall into negative territory on the day

Gold retraces sharply after attempting to hold a break above $1,400 earlier


Gold has erased its gains from earlier today as price falls down to a low of $1,382.33 after having touched a high of $1,412.08 in Asia Pacific trading. The move lower in gold comes as Treasury yields are creeping higher alongside equities with US futures now paring losses and 10-year yields rising by 1.4 bps to 2.043% currently.

I sense there’s some hints of profit taking ahead of the weekend as there hasn’t been any solid movement in the dollar to suggest a reversal in this week’s moves just yet. Besides, the easing central bank rhetoric still stands for gold regardless of how the dollar may perform in the aftermath of the Fed decision on Wednesday.

USD/JPY is creeping higher to 107.53 so that tells me that this is more sentiment-based than a significant reversal. Unless price starts to threaten a move back towards the key hourly moving averages, the drop here doesn’t have any significant technical breaks just yet.

In the bigger picture though, I reckon gold will be a buy on dips play amid more dovish global central banks. But the key risk event in the next week will be US-China trade talks so there’s that to watch out for before anything else.

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