Gold Price Analysis: Support Must Hold to Prime Further Gains

London (July 11)  Gold is battling the three-month downtrend - started around $1,365/oz. - and may garner some support from the recent escalation in the US-China trade war spat, especially after Washington announced new tariffs on $200 billion worth of Chinese imports. In addition it seems that US President Donald Trump is spoiling for a fight at the NATO summit over funding commitments with Germany firmly in his sights.

A War to Trade More, Not Less - What's Behind US-China Tariffs

Spot gold however trades marginally lower on the session, along with other safe-haven assets, as a strong US dollar continues to weigh on any risk-off rally. From a technical perspective gold continues to point to lower prices but the recent rebound at the $1,238/oz. level may provide some welcome relief for gold bulls and indicate higher prices in the short-term. If we look at the December 15, 2016 to January 25, 2018 rally from $1,122.75 to $1,366.13, then 50% Fibonacci retracement comes kicks in at $1,244.45/oz., just ahead of last week's $1,238/oz. and the December 12, 2017 swing low at $1,236/oz.

A break and close below these levels would open the way for further falls to $1,215/oz. - 61.8% retracement - before swing lows at $1,205/oz. and $1,195/oz. hove into view. On the upside, $1,266/oz. and $1,273/oz. look attainable if support holds and risk-off sentiment continues to hold sway.



Speculators still remain long of the precious metal according to the latest COT report, but not as long as they have been - DailyFX analyst Paul Robinson's latest COT analysis is here - while the IG Sentiment Indicator - see above - also shows retail are long gold.

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