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Gold Falls Below the 1,500 as Equities and US Bonds Recovery

Mauricio Carrillo

Happy Monday FX Emperors!

Well, it seems that it is also happy for equities investors who are repurchasing risky assets after the August sell-off. Besides, bonds are recovering ground, and Trump has accepted an extension of the Huawei permit to buy U.S. supplies. All that sent gold and silver down below critical levels.

On the other hand, Germany materialized markets’ fear of recession as the government said it is preparing measures for a possible economic crisis.

Gold and silver are trading down on Monday as investors are betting on riskier assets such as equities and currencies. XAU/USD is testing the 1,490 area, while silver is trading below the 17.00 area.

White House extends permission to Huawei

A Reuters piece of news reported that the White House, in the body of the U.S. Commerce Department, would be willing to extend a reprieve given to Huawei Technology to buy supplies from U.S. companies for at least 90 more days.

According to Reuters citing sources, “the temporary general license will be extended for Huawei for 90 days. The sources also said that presidents Donald Trump and Xi Jinping are expected to discuss Huawei topic in a call later this week.

Germany prepares stimulus measures as a contingency for crisis

The drums of recession are real, and despite it is not a fact, yet Germany is preparing itself in the event of a crisis. According to news from the European country, would be ready to act if the job market gets depressed.

However, Germany’s Finance Minister Olaf Scholz told reporters, that “if we have a debt level in Germany in relation to economic output that is below 60%, then this is the strength we have to counter a crisis with full force.”

Gold below 1,500

XAUUSD daily chart August 19

Gold is trading below the 1,500 level for the first time since August 14 with the unit testing the 1,490 area. Investors are now putting their money in riskier assets.

“The rally in bond markets seems to have paused at least for now, and we’ve seen some additional gains in stocks over the weekend,” Saxo Bank commodity strategist Ole Hansen said in a recent article, “so a bit of a more optimistic start to the week is helping to attract profit taking in gold.”

In this framework, gold is obviously driven by fundamental factors. However, Technical conditions are posting more declines in the short term with consolidation below the 1,500 level in the cards.

If the unit extends losses below 1,500, it will find support at 1,480, August 13 minimum. Then, watch out for the 1,440 area as the final frontier before entering a congested zone between 1,400 and the mentioned 1,440.

To the upside, XAU/USD needs to recover above the 1,500 area again to build another bullish leg for the metal. Check 1,520 and 1,535 as immediate resistances. Above there, 1,550 is the next significant buying zone.

Silver below 17,00

XAGUSD daily chart August 19

Silver is trading below the 17.00 on Monday as investors are leaving metals behind to bet on riskier assets. Currently, XAG/USD is trading 16.95, posting 0.90% daily losses in what it would be its second negative day in a row.

The unit is now testing the 16.80 area with technical studies suggesting more room for the downside. Below there, the 16.60 is a crucial area to watch. Then, 16.20 and 16.00.

This article was originally posted on FX Empire