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The 90 day rollback / pause with China in the trade war caused a sudden decline in Gold’s safe haven trade at the start of the trading week as risk on sentiments increased sharply on the news. Whether this becomes a real winding down in the Gold bull trade on weakening US recessions risks and a near term bounce and strength back in the USD trade will depend very much on Gold buying continuing on the pullback. China have been an enormous part of the Gold bull rally, many want to hedge their risk by using the recent dip to rebuild their longs.

The euphoric environment could quickly dwindle. Very few details have been revealed regarding the China/US tariff pause, any stall in negotiations like those seen with Europe and the US on achieving a trade deal would bring swift buying back into the safe haven trade.

What about a US recession? Since last week, this news has quickly reduced concerns and percentage risks of US entering into a recession have lowered. Would that change the FED’s course on holding rates steady? The chances of a June rate cute were slashed to just an 8.1% probability.   

As inflation risks are likely to ease if a permanent trade deal with the US/China is achieved, inflation is also tenacious, leading Deutsche Bank to issue a report this week siting that it does not expect the Fed to reduce rates quickly.  Certainly this 90 day period gives the Fed more time to determine the impacts of policy on the US economy.

The macroeconomic picture therefore isn’t clear cut and continues to be somewhat murky. Technically, this could be sufficient to put a pause on any new ATH on the Gold trade.

Major support at YVWAP followed by deviation areas 3172 and 3109. RES 3296, 3347-50.  PSAR remains bearish.

240TF, SUPP base holds firm, 8EMA near term SUPP, PSAR remains bearish. RES 3269 and 3280, 3326. Market has formed a Lower high. Whilst Gold may not enter in a deep correction, it could enter a period of consolidation and equilibrium whilst it re-balances.

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