Gold remains one of the most popular trading instruments due to its safe-haven status. Throughout this summer there has been a pronounced bullish trend for the XAU/USD, which continues even today.
The growth of the price of gold is mainly motivated by general uncertainty and risk aversion in the financial markets. One of the most negative factors is the continued trade war between China and the United States. At the end of June, Donald Trump and Xi Jinping agreed on a temporary truce and made plans to restart trade negotiations. The price of gold fell around that time, as investors were cautiously optimistic that the conflict might be resolved soon. However, as the talks kept moving very slowly this optimism vanished, and two weeks ago Trump suddenly announced additional tariffs for China, breaking the goodwill verbal agreement he’d achieved with Xi Jinping just a month earlier. Now it appears there won’t be a resolution anytime soon, and so the price of gold has been steadily increasing.
Moreover, the recent change in the monetary policy of the Federal Reserve has also influenced the XAU/USD trend. The central bank recently implemented the first interest rate decrease in a decade. They have also shown a readiness to further adjust the interest rate if the US economy is underperforming. Though this wasn’t enough to weaken the American dollar, the expectation of a loose monetary policy itself was enough to lower risk appetite and make gold attractive again.
Price corrections are possible at this time, so it’s best to buy gold in long-term deals rather than short-term ones. Currently the XAU/USD is trading at around 1525.20. The daily pivot point is located at 1506.55, with support levels at 1493.63 and 1475.06, while the resistances lie at 1525.12 and 1538.04. A strong buy is recommended in the daily term.
