By Mauricio Carrillo | FX Empire
Gold and Silver are trading positive on Monday as investors are digesting news from China and its decision for new retaliation after the U.S. decision on more tariffs. Also, concerns on global growth are fueling risk aversion, lifting gold to highs since May 2013.
The cheapest yuan in a decade
China allowed yuan to fall to its lowest level in more than a decade as a retaliation measure following the U.S. President Trump to add more tariffs to Chinese goods.
China, historically, has been a country which likes to control its currency to fuel its exports around the world; however, the country was holding the yuan, so the USDCNY wasn’t able to trade above the 7.000 level since May 2013.
However, after the recent set of developments in the trade war, China stopped defending the fluctuation, and the USD/CNY broke above the 6.9740 on Monday, and it jumped to 7.045, its highest level in over six years.
The Dollar to Yuan is now trading at 7.033, 1.36% positive on Monday.
The trade war between the United States and China has now entered in a new phase as experts are now considering that China abandoned any hope for a trade deal with the U.S. Real concern about global growth has taken the market. Risk aversion is the theme of the day, sending gold up to highs.
Gold Up to highs since 2013
Gold opened the week with a positive tone as investors are buying the metal amid its condition of a safe haven. Traders don’t like the way the United States and China are managing the trade war.
On Monday, gold jumped to break above July 19 highs at 1,453, and to trade as high as 1,462, maximum since May 2013. Currently, XAU/USD is moving at 1,460, 1.35% positive on the day.
Technical conditions suggest more gains in the short and middle term for gold. In fact, “the market is currently being driven by upside momentum,” as FX Empire analyst James Hyerczyk said in a recent article.
“A sustained move over $1457.50 will indicate the presence of buyers. Holding above the previous top at $1467.00 will indicate the buying is getting stronger,” affirms Hyerczyk. “If his generates enough upside momentum then look for a rally into a pair of uptrending Gann angles at $1492.40 and $1494.50.”
To the downside, the bullish scenario is sustained by July 19 high around 1,453, but also by the 1,440 support. If broken, next levels to watch are 1,400 and 1,380.
Silver up, but contained by 16.60
Silver is also trading positive on Monday as the unit is enjoying the pro-metals environment in markets.
XAG/USD jumped on Monday to recover the 16.40 area and to test the 16.60 level earlier in the day. However, the unit wasn’t able to break above that area, and it is now trading at 16.43, 1.44% positive on the day.
Technical conditions suggest that the movement will be short-lived as the metal is not strong enough to sustain gains. However, time will have its say as risk aversion has taken the market.
Metals report for August 5, 2019
Copper, on the other hand, is trading down for the fifth straight day as the metal is extending the break below the 2.600 area it performed on Friday. Today, XCU/USD is 0.80% negative at 2.5460, testing 2019 lows at 2.5280.
Platinum is trading positive on Monday as the unit confirmed the 842.15 support and it traded back on Monday to test the 860.00 area.
Palladium opened the week with gains as the unit is extending its rebound from Friday’s lows at 1,380. It is currently trading at 1,440, 2.25% positive on the day.
This article was originally posted on FX Empire