Gold: Bulls and Bears Brace for September Shake-Up

LONDON (August 14) After reviewing the movements of the gold futures in different time chart, I anticipate that the bulls and the bears seem to be waiting for a definite clue to move further.

After testing a low at the significant support at the 50 DMA, gold futures are constantly facing stiff resistance at $3422 in a daily chart due to currently prevailing indecisiveness on trade tariff front.

Undoubtedly, President Trump’s move to keep the gold bars out of the tariff ring ticked the gold higher for three consecutive days after a sharp decline at the start of this week.

After extending the tariff trade deadline for China this Wednesday for another 90 days to avoid a three-digit tariff, on Thursday, the US President warned of “severe consequences” for Russia if Vladimir Putin blocked progress toward peace in Ukraine ahead of their summit, which is scheduled for this Friday.

Undoubtedly, gold’s advance has been tempered by such geopolitical developments as the outcome of Friday’s summit between President Donald Trump and Russian President Vladimir Putin in Anchorage will provide a definite clue for the further directional moves of the gold futures.

I anticipate that a constructive outcome of this summit could reduce demand for gold as a safe-haven, and will like to trigger a selling spree in gold futures, while any signs of failed negotiations or heightened tensions could boost bullion prices.

On the other hand, mild data has strengthened the case for the Fed to cut its benchmark interest rate at its September meeting. Markets now price in a 95% probability of a reduction next month, and the lower interest rates reduce the opportunity cost of holding non-yielding assets such as gold, making bullion more attractive to investors.

Investing.com