Due to increased tension in trade relations between China and the United States, the demand for protective assets, in particular gold, has risen sharply. March gold futures on COMEX on the basis of trading rose in price by 1.7%, to 1349.30 dollars per troy ounce, which was the most significant one-day growth since February 14.
Fears that the protectionist trade policy of the US and China will provoke trade wars caused a large-scale decline in the dollar, world stock indices and supported the quotes of gold. Another surge in the volatility of trades in this non-ferrous metal was caused by the US decision to impose restrictive measures against China. Among these measures - import duties on supplies from China worth $ 60 billion, restrictions on the acquisition of American companies and the transfer of technologies to China.
This was stated on Thursday by US President Donald Trump, who intends to reduce the US trade deficit with China to $ 100 billion from the current record level. "Our trade deficit with China, according to various estimates, ranges from $ 375 billion to $ 504 billion. We have a situation with a colossal theft of intellectual property, corresponding to the loss of hundreds of billions of dollars", Trump said before signing the memorandum.
China reacted negatively to this decision of the White House. "The US actions do not meet the interests of the Chinese side, or the interests of the American side, or the interests of the whole world, becoming a bad precedent. In any case, the Chinese side will not be indifferent to seeing how its legitimate interests are damaged, we are fully prepared to defend our interests in a resolute manner", the Ministry of Commerce of China said in a statement.
Investors are extremely concerned about the threat of the emergence of world trade wars. Previously, the US announced the introduction of import duties on steel and aluminum, and first of all, it will affect Japan and China, the largest suppliers of these products in the US. Japanese Commerce Minister Hiroshige Seko said last week that "this measure is extremely unfortunate". "If we respond to the steps taken by the United States by a series of retaliatory measures, this could indeed lead to the collapse of the free trade system", Seko added.
Under normal conditions, monetary tightening strengthens the dollar and leads to a decrease in gold quotations. At the March meeting, the Fed raised its forecast for economic growth for the next two years and left its intention to raise the rate this year two more times. Basically, economists expect that a further increase in the interest rate in the US this year will put pressure on gold.
But, despite the Fed's decision to stick to its plan to tighten monetary policy, the dollar is getting cheaper, and gold is rising in price, as geopolitical risks related to the prospect of new trade wars are coming to the fore.
With the opening of today's trading day, gold is traded in a narrow range. On the one hand, the dollar continues to become cheaper today, which positively affects gold quotes. On the other hand, today there is an increase in the main US stock indices, which reached important support levels on the eve, which indicates the resumption of purchases of risky assets of the US stock market. Against this background, gold, usually, becomes cheaper.
If the dollar starts to recover when the positive dynamics on the US stock market resume, then the XAU / USD will start to decline again.
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Support levels: 1341.00, 1328.00, 1326.00,
1307.00, 1297.00, 1277.00, 1268.00
Support levels: 1341.00, 1328.00, 1326.00, 1307.00, 1297.00, 1277.00, 1268.00
Resistance levels: 1354.00, 1361.00, 1365.00, 1370.00, 1390.00, 1425.00
Sell Stop 1340.00. Stop-Loss 1351.00. Take-Profit 1328.00, 1326.00, 1307.00, 1297.00
Buy Stop 1351.00. Stop-loss 1340.00. Take-Profit 1354.00, 1361.00, 1365.00, 1370.00
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