Spotlighting an Unwelcome Journey

China-U.S. Relations

Summary:

In the case of escalating China-US tensions, it is still optimistic about the upward space. Markets were rattled by the expected visit of U.S. Pelosi to Taiwan amid warnings from China. Gold bulls are still on track to test key resistance at $1,787.

BUY XAUUSD

Close Time

CLOSED

1781.81

Entry Price

1824.00

1748.00

4215.48 +17.57 +0.42%

7.5

Pips

Profit

1748.00

1782.56

Exit Price

1781.81

Entry Price

1824.00

Fundamentals

Safe-haven funds have been the theme of the market so far this week. Of course, there are other factors that influence market sentiment, but geopolitics is obviously playing a leading role.

Open interest in the gold futures market fell for a second straight session on Tuesday by more than 4,000 contracts, according to high-frequency data order flow from CME Group. Likewise, volume was down for the fourth straight session and around 105,000 contracts are deducted. Gold's gains on Tuesday came amid reduced open interest and volume, suggesting a possible correction to the downside could develop in the near term. In addition, gold's price movement appears to be capped by the $1780 level so far.

The rise in risk appetite this time was triggered by geopolitics. U.S. House Speaker Nancy Pelosi is rumored to be expected to arrive in Taiwan later today and meet with the region's leaders early tomorrow. At the same time, the event will be an "all-nighter" for financial markets, and if Pelosi makes a successful visit to Taiwan, it will be the most senior US official to visit Taiwan in 25 years, making it a symbolic event.

Notice how this is all written in the conditional tense? There was no official confirmation that the visit would take place, as Pelosi herself tweeted earlier this week her itinerary, which did not include Taiwan. Clearly, China is very unhappy with the visit, and potential retaliatory measures including a "military" option will be taken.

Despite the USD rebounded recently, buying interest in gold has not waned as investors prefer to hold gold as a store of value amid escalating tensions between the U.S. and China over Taiwan.

Rising geopolitical tensions have also led to safe-haven flows into traditional safe-haven assets such as U.S. bonds, negatively impacting U.S. Treasury yield, while a continued slide in yields could still weigh on the USD. In near future, geopolitics remains a closely concerned focus for financial markets over the next few sessions.

XAUUSD: Spotlighting an Unwelcome Journey_1

Technical Analysis

After the gold price rebounded in the past few days, the momentum has weakened but is still running above the 4-hour Bollinger middle band. In addition, the 5-day and 10-day moving averages form a golden cross and move upward, suggesting that demand for rebound still exists, and to go long at lows is recommended. Moreover, the upper target resistance is concerned with the 4-hour 200-periodic line and the Bollinger upper band, while the lower target is the 1-hour Bollinger lower band and the upward support.

It is expected that the possibility of the gold price breaking above 1800 in the next few trading days increases significantly, and the target can even be seen near the Bollinger upper band around 1824 in the daily chart. However, in the short term, the possibility of a surge and a shock consolidation should be considered. Therefore, it is recommended to buy the dips.

Trading Recommendations

Trading direction: Long

Entry price: 1776

Target price: 1824

Stop loss: 1748

Validity: 20:00:00, 2022/08/16

Support: 1764/1758/1750

Resistance: 1798/1812

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data