Gold remains below $1562/60, ignores risk-negative news from the Middle East
- Gold prices fail to cross the seven-day-old upside barrier.
- The market seems to pay a little attention to the headlines from Libya and Iraq.
- Broad US dollar strength, likely resolution to the latest geopolitical problems, US-China trade deal play against the risk-off.
Gold prices stay mostly downbeat while taking rounds to $1,557.20, following an uptick to $1,559, during the early hours of Monday’s trading. The yellow metal fails to respond to the power play in Libya and protests in Iraq amid the broad US dollar strength. Also exerting downside pressure on the quote are hopes that the global leaders will be able to tackle the Middle East’s problems while cheering the trade optimism surrounding the US.
Most of the Libyan oil exports, around 8,00,000 barrels per day, are on hold as the commander Khalifa Haftar took ports under his control. Iraq is also undergoing a tough time where the protestors have forced the Al Adhab field to stop the oil output.
However, traders seem to ignore the news as the US 10-year treasury yields and S&P 500 Futures are both positive around 1.85% and 3,327 respectively.
The US dollar (USD) remains on the front foot against the majority of counterparts as the recent data from the world’s largest economy limit further rate cuts from the US Federal Reserve (Fed). Also supporting the greenback could be the Trump administration’s ability to strike the key trade deals with China, Mexico and Canada.
On the contrary, trials on US President Donald Trump’s impeachment will begin from Tuesday and could challenge the market’s risk tone. Also, the latest comment from the Republican leader indicates hardships for the US-China phase-two deal as it says, “we will vigorously enforce its terms. Hopefully, we won't have to.”
Looking forward, markets in the US are off during the day, due to Martin Luther King’s Birthday, whereas fewer catalysts are available from the rest of the world. As a result, the yellow metal may keep the latest momentum in place except for any fierce trade/political headlines.
While an upside break of $1,562 can trigger the yellow metal’s fresh recovery towards January 07 top surrounding $1,573, a downside break below September month high of $1,535.43 could fetch the quote to $1,520.