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Gold drops from six-year highs on turn-around Tuesday

  • Gold prices dropped heavily on the drop of a trade war headline.
  • Risk is sensitive but gold bulls stop in on the downside at the 1480s.

Gold prices on turn-around Tuesday flipped over from six-year highs following news that the US was delaying tariffs on China with hopes of further talks to take place in September. Spot gold dropped from the highs of $1,535 to a low of $1,480, ending on Wall Street  – 0.60% as market sentiment still remains cautionary on any signs of progress between the US and China – (Hong Kong could well be an underestimated risk to the trade progress between the two nations and global growth). As for futures, Gold for December delivery on Comex dropped  $3.10, or 0.2%, to settle at $1,514.10 an ounce after trading as high as $1,546.10 an ounce. Overall, the price of the safe-haven metal is still up 18% year-to-date rise, most of the rise in august alone.

U.S. will delay imposing 10% tariffs on certain Chinese products until December

The U.S. Trade Representative’s office said the U.S. would delay imposing 10% tariffs on certain Chinese products until December 15th. this follows the apparent discussion between Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. Officials are said to engage in talks again within two weeks. However, the goods news was dimmed down within the same hours as to when there were reports that the Chinese military was headed to the Hong Kong border as protestors continue to demonstrate and keep the Hong Kong airport locked down. 

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Gold levels

Gold is holding territories above the psychologically important 1500 level, although 1480 has shown its resilience on Tuesday. A break there pens risk to 1450s and 1402. On a continuation, to the upside, the 1528/30s comes as a prior support area where the price would be expected to hold initial tests. However, on a full-on break higher, bulls will look to the 127.2% Fibo target which is located around 1,560, guarding the Oct 2012 highs at 1795.

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