Gold: Progress on trade disappoints bullion buyers but soft global economics remain in support
- Gold prices remain around $1325 on early Friday.
- The bullion struggles to justify weaker global economics and likely trade peace between the US and China.
- $1322 seem near-term important support with $1336.50 likely immediate resistance.
Gold clings to $1325 during the initial trading hours of Asia on Friday. The yellow metal dropped nearly $20 on Thursday as the US and China make progress on discussing a trade deal. However, sluggish manufacturing numbers from the US and the EU limited additional declines of the safe-haven.
China’s Vice Premier Liu He reached Washington for two-day trade negotiations with the US diplomats on Thursday. The dragon nation offered additional imports of the US agricultural products for a good start to the discussion and followed a Bloomberg report that the US President Donald Trump plans to meet Mr. He during Friday afternoon. With this, investors remained upbeat that the world’s two largest economies may soon come to peace on trade terms.
While optimism at trade front dragged the yellow metal downwards, economic calendar flashed alternative signals. The US durable goods orders grew lesser than forecast 1.5% to 1.2% in December while Markit flash manufacturing PMI posted 53.7 number against 54.9 prior. Further, the Philly Fed Manufacturing Index declined to -4.1 versus 17.0 previous. In case of Eurozone details, Markit Flash manufacturing PMI slumped into contraction region with 49.2 reading compared to 50.5 prior.
Looking forward, developments surrounding a trade deal between the US and China are likely to act as a major market catalyst while comments from ECB & Fed policymakers could also offer intermediate trade opportunities.
Gold Technical Analysis
Sustained dip beneath a year old trend-line support, previous resistance, at $1322 now, becomes necessary for the yellow metal to aim for $1315.50 and $1307 downside levels.
If the pair takes a U-turn from resistance-turned-support, $1336.50 and $1348 may regain buyers’ attention.