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Gold Down Amid Trade And Economic Activity hopes; Silver drop to 2019 lows

Mauricio Carrillo

Gold is extending its decline on Tuesday as risk appetite took the market. US-China trade talks are advancing, while economic data in Europe is showing economic improvement and earnings reports in the US are giving hopes.

Silver is trading down on the day after failing to hold Monday’s rebound.

Fundamental factors fuel risk appetite

The United States and China are moving closer on a deal to finish their trade and tariff conflict. Now experts are expecting an announcement in the next weeks.

On the other hand, recent economic data is giving reasons to the market to stop worrying about a global growth slowdown.

In the United Kingdom, the ILO unemployment rate remained at 3.9% with average earnings excluding bonus rising 3.4% in February. All in line of expectations.

In Germany, the ZEW economic output jumped to 3.1 in April, well above the improvement expected by the market to 0.8% and a significant recovery from March reading of -3.6.

The ZE economic sentiment in the Eurozone rose to 4.5 in April from a -2.5 in March.

The construction output in the eurozone advanced 2.96% between January and February, better than the 0.30% rise expected by market.

Finally, a round of a good earnings report in Wall Street is fueling risk appetite with Bank of America, Goldman Sachs, and Johnson and Johnson.

Dollar index flat after a bouncing Monday

The dollar index is trading flat on Tuesday as investors are weighing good economic data in Europe. DXY is currently trading at 96.90, 0.02% down after the pair recovered from 96.70 traded on Monday to price as high as 97.10 on Tuesday.

The pair is now trading near to intra-day lows. However, sideways movements in the dollar index are not driving gold up.

Gold down for the fourth day

XAUUSD daily chart Gold April 16

The yellow metal is trading down for the fourth day in a row as investors are betting on riskier assets following good economic and trade conflict news.

In the last four sessions, XAU/USD has lost 2.1% of value from 1,310 on April 11 to today’s lows around 1,280.

“The main reason what pressures gold is the improved economic data,” analyst Dominic Schneider of UBS Wealth Management in Hong Kong said to CNBC. “For countries such as China for example, things have turned around a fair bit.”

Currently, XAU/USD is trading 0.25% down at 1,284. Technical indicators are suggesting more room for the downside with 1,280 as immediate support.

Below 1,280, investors would expect some stop-loss was triggering around 1,275. Then, a more profound decline to the 200-day moving average at 1,250.

To the upside, though options for the bulls are limited, the unit needs a recovery above the 1,310 level to recall a bullish movement.

Silver down to 2019 fresh lows

XAGUSD daily chart silver April 16

Silver broke below 14.85 on Tuesday and briefly traded as low as 14.70, its lowest level since December 24. The move came due to overall metals bearishness with some stop losses activation.

Currently, Silver is trading 0.63% negative on the day at 14.88. Market sentiment is bearish and technical indicators suggest more declines in the short term.

Now, the support is set at 14.70. Below there, XAG/USD would enter into a range between 14.50 and 14.70.

This article was originally posted on FX Empire

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