Gold prices were having a hard time keeping the bullish action alive after a positive recovery move made during the beginning of the week, with market environment changing. Instead, on Friday during the Asian trading session, gold was hit with massive selling pressure. It fell to its lowest level since April 10, trading close to the $3,120 line.
Gold prices have fallen lately. This decrease largely reflects the impact of the 90-day trade truce between the United States and China. This agreement has taken the pressure off somewhat on global markets. In turn, investors have begun flocking to riskier assets rather than remaining in typical safe havens, such as gold. As a result, more traders are giving up on their dour outlook for the precious metal.
As things stand, the price of gold is approaching the 200-period Simple Moving Average (SMA) on the four-hour candlestick chart. As such, this oft-covered technical indicator is a key benchmark traders look to when evaluating bullish and bearish price trends. For the third time since then, gold’s recovery from that low has run into a major obstacle. Even though it is near a record high, it has a hard time working its way back up.
As per the market analysts the US-China trade truce has acted as a more major headwind on gold prices. Typically seen as a safe-haven asset, gold often receives an influx of investment during periods of economic uncertainty. With the bolstered market sentiment from the trade agreement reducing investors’ fears, investor appetite for gold will likely decrease.
Gold prices are currently flirting with the $3,120 level, which would be a 5-week low. As usual, analysts are astutely watching the subsequent market reaction. The interaction between geopolitical developments and market sentiment should further drive gold’s trajectory in the following weeks.