10:47, 05 March

Falls Sharply to Six Week Low as Trade Talks Enter Final Stages

What a difference a week can make. Only a couple of weeks ago gold was cruising along pushing to new nine month highs on the back of solid support from the key $1300 level. In the last week gold has crashed lower pushing through any possible support at the $1300 level and moving to its lowest levels in six weeks, which will be significant as this level may now offer some resistance should it attempt to rally higher. 
Several weeks ago gold enjoyed a solid push higher, breaking through resistance at $1300 and establishing a new trading range above this level. The significance of $1300 is for several weeks, gold met stiff resistance at this level, after enjoying a healthy surge higher throughout December.

The move higher in December saw gold move to a then six month high just shy of $1300 after enjoying some solid support from the key $1240 level and the $1200 level before that. The $1240 level may play a role again should gold continue to decline as it is the next obvious support level. For a couple of weeks before the push higher gold consolidated a little resting on support at $1240 after making a strong rally back towards this level, which had become significant when it offered reasonable resistance halting its climb a few months ago.

After struggling with the resistance level at the $1240 level for several weeks, it fell back to another key level of $1200 where it bounced off strongly. The $1240 level provided some support in July and more recently pushed gold lower in October, so it is significant that it has now broken higher. The market will now be watching the $1300 level as this level was significant earlier last year. For the most part through October and November last year gold had made a home in between two key levels of $1200 and $1240, and the markets were watching closely to see which way the next big move might be.

Ongoing concerns over the United States - China trade dispute and its potential impact on global growth seem to have eased in the last week or so as signs are emerging of an positive end to negotiations. According to multiple sources, China and the U.S. are approaching the finish line on trade negotiations that could end later this month. According to a source briefed on the negotiations, the world’s two largest economies appeared close to a deal that would roll back U.S. tariffs on at least $200 billion worth of Chinese goods and possibly end their drawn-out trade dispute. Gold has felt the brunt of the good geopolitical news, as equities and the US dollar have moved well on the back of risk-on sentiment in the markets with the positive U.S.-China talks. On the weekend, the Wall Street Journal reported that U.S. President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around 27th March, given progress in talks between the two countries. Last week U.S. Treasury Secretary Steven Mnuchin told CNBC that the two sides were getting closer to a deal. White House economic advisor Larry Kudlow also told CNBC “the progress has been terrific.”