Gold prices had a tough time holding onto a recovery as they caught the eye of sellers during the Asia-Pacific on Friday. Following this rapid ascent, the gold market has been exceptionally volatile, wrestling with a low of about $3,120. It’s quite literally tripping, flailing, and failing to gain much momentum off the robust recovery reported yesterday. The metal is attempting to recover after slumping down to a one-month low. This volatility comes just above the 200-period Simple Moving Average (SMA) on the four-hour chart.
On Thursday, gold prices found some reprieve from their recent tumble. This momentum evaporated just as fast as traders knee-jerked to the prevailing market trends. Gold price’s recent performance is a testament to this multifactor reality, as the effect of positive domestic economic indicators has been offset by our deteriorating geopolitical landscape.
The US-China trade truce, which aims to ease tensions for a period of 90 days, has contributed to a more stable environment for global markets. On the downside, this agreement will act as a headwind for gold prices. When uncertainty is in the air, investors flock to gold as a safe haven. The recent trade truce has calmed perceived risks, driving down demand for this precious metal.
Freshly disinflationary prints out of the United States have increased the odds on soon-to-be-delivered rate cuts by the Fed. This latest development is likely to weigh on gold prices even more. Lower interest rates generally increase the appeal of non-yielding assets like gold. In spite of these bullish fundamentals underpinning the market, gold prices continued to tread water, failing to climb through key resistance levels.
While market participants take time to decide what these economic events mean for the future, gold prices continue to be pressured. The continued up-and-down movement has resulted in a Fork-in-the-Road mentality among traders.
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