13:01, 11 September

XAUUSD - Clings to Key $1200 Level on Brexit Hopes

After rallying well a few weeks ago to a two week high around $1215, gold has since been content to drift a little lower and return to the current key level of $1200. It has received both support and resistance from this level in the last couple of weeks but doesn’t appear to be in any rush to move too far away. Several weeks ago gold endured a strong fall down to its lowest levels in 18 months to below $1160, so it has done well to rally higher back to the key $1200 level and regain some of the losses. Just prior to the sharp fall, gold was able to consolidate a little around $1210 and take a breather, however it remains firmly entrenched in a medium term down trend.

Throughout the second half of June gold dropped sharply to fall to a then low for 2018 below $1240 before being propped up at this level. The key level of $1240 had been a steady rock of support in the last 12 months for gold so it is reasonably significant that it has now broken down through it and then some. Just prior to the sharp drop in early June, gold was quite content to trade within a narrow range and consolidate above the $1290 level, up to around $1310. Just prior to this consolidation gold was sold off quite strongly from the resistance level at $1360 after making another run at this key level. The $1290 has been significant for gold of late and should it rally it will likely met some resistance at this level.

After falling for several years up until the end of 2015, which saw it fall from its all-time highs down to around $1050, gold has done well in the last few years to regain some of those losses, although it is really returning the gains in the last few months. It had climbed back above $1300 on several occasions since then and generally in the last 15 months it had been steadily climbing higher from around $1100.

Gold prices have been given a small boost on the hopes of a swift Brexit deal, which pushed the sterling to a five week high and helped the Euro higher, making gold cheaper for buyers in Britain and the euro zone.The European Union's chief negotiator Michel Barnier said that an agreement on Britain's exit from the bloc was "realistic in six to eight weeks."For the second time in a week, Michel Barnier has signalled his desire to move ahead on the Brexit negotiations, less than seven months before the United Kingdom is scheduled to leave the European Union on 29th March 2019.Gold has suffered of late as weak emerging market currencies, rising US interest rates driving the US dollar higher and trade disputes have taken their toll.Last Friday saw more strong U.S. jobs data which suggested that the Federal Reserve would continue to raise interest rates.Also last Friday U.S. President Donald Trump said he was ready to impose tariffs on virtually all Chinese imports, prompting a threat by China to retaliate.