With US-China trade tensions softening, gold is correcting from overbought technical levels. Investors are optimistic that a bilateral trade pact could boost both global and American economic growth. Washington is set to unveil the deal’s framework today. While duties between the US and China are likely to remain, they will not be as high as the levels imposed by Trump in April. The potential deal with China follows an agreement reached with the United Kingdom last Thursday.
Commerce Secretary Howard Lutnick reiterated on Sunday that the US is not prepared to lower tariff rates below 10 percent. The trade agreement with Britain maintained tariffs at 10%, a level Lutnick said would remain for the foreseeable future.
In anticipation of a sell-off, investors have begun reducing their positions in gold. According to the latest Commodity Futures Trading Commission data, hedge funds have cut their bullish bets on gold to the lowest level in over a year amid growing optimism about progress in trade talks.
Additionally, the easing of safe-haven demand has been supported by a truce between India and Pakistan after four days of clashes that threatened to escalate into a wider conflict. All of these factors are currently contributing to the weakening of gold as a safe haven asset.
The overall recommendation is to sell gold.
Profits should be taken at the level of 3150. A Stop loss could be set at the level of 3370.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
