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Gold fell by more than 3% on the news that Beijing had agreed with Washington on a phased reduction in tariffs. However, the subsequent statements by US President Donald Trump that he was not ready to completely abolish duties on Chinese products weakened optimism about the US-Chinese trade deal.
Against this background, gold managed to win back some of the points after falling to three-month lows, but the precious metal lacked a confident bullish momentum.
Despite attempts to increase, the fall of gold does not seem to have ended and a continuation will follow.
Apparently, there is a "shake" in the precious metal market, which may lead to testing a 200-day moving average, which is now in the region of $1,390 per ounce.
Moreover, it is possible that quotes can test the level of $ 1360 per ounce.
It is important to understand that the level of $1,500 per ounce is a kind of "rubicon". If the price consolidates above this level, then it will go to the mark of $2,000. Otherwise, testing the level of $1,000 will be only a matter of time.
Most likely, in the end, gold will still be able to gain a foothold over the level of $1,500, but before that, the market expects a final "shake" with a "dive" of prices closer to the level of $1,400 and, possibly, briefly lower. Such "sales" can be used to buy precious metals, since then it will rise in price.
Gold demand is expected to grow for the following reasons.
Firstly, despite the positive mood that has recently engulfed markets, the world is still troubled. In addition, the threat of a global recession has not been canceled, and the United States and China still have not shaken hands.
Secondly, a lot of liquidity is pouring into the market. These are lowering interest rates and new asset buyback programs in the US and the EU. Therefore, whatever one may say, when optimism in the market is over, liquidity will not go anywhere: gold will be bought among other instruments.
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