Gold prices managed to inch higher on Wednesday despite the US and China have finally signed their phase one trade deal. The precious metal climbed from local lows to the levels just shy of the $1,560 level which caps the upside attempts on Thursday.
Optimism over the preliminary trade deal added to the optimism in the global financial markets but investors refrained from euphoria, as some worries about the remaining tariffs and a number of issues that are still unresolved persist. This partly explains, why the safe-haven metal stayed afloat after the official ceremony. In other words, the persisting uncertainty surrounding the US-China trade relations caps market optimism which in turn limits the downside pressure on safe-havens like gold.
Also, the precious metal is supported by a generally weaker dollar. USD demand looks muted after some disappointing economic data released earlier this week. CPI and PPI numbers came in mainly lower than expected, suggesting the Federal Reserve won’t shift to rate hikes any time soon, which is positive for the bullion. Today, the United States reveal retail sales data which could increase the downside pressure on the greenback. In this scenario, gold may even appreciate somehow until the end of the day.
From the technical point of view, the yellow metal which firmly holds above the 100-daily moving average since December 24, remains bullish despite the recent downside correction. Besides, just above this moving average, the $1,500 psychological handle lies. So, the support line in this area looks fairly strong. Should the metal struggle to resume the upside bias any time soon and regain the above mentioned $1,560 area, prices may retreat to the $1,535 region which should act as an intermediate support. Once above the immediate resistance, the bullion may retarget the $1,575 figure which in turn stands on the way to long-term highs above the $1,600 handle.