Gold prices climbed to fresh six-month highs a week ago as the rally was capped by the psychological barrier at $1,300. The precious metal failed to regain the sustainable traction since then and goes through a consolidation mode in anticipation of fresh drivers. On Friday, the prices resumed the upside move, challenging the $1,295 handle.
In the weekly and monthly charts, the general picture looks far more distinct – the bullion is steadily recovering from August lows and looks set for further gains. Technically, the immediate upside target comes at the $1,300 level, a sustained break of which is needed for entering another bullish phase.
The weak dollar plays into the metal’s hands and could support the prices further as a more ‘dovish’ Fed policy is not yet fully priced in by investors. On the other hand, the downside risk for the precious metal as a safe haven comes from the US-China trade relations. The two countries assessed the recent talks as deep and positive. The next negotiations will take place later this month, the Chinese officials reported. So stock markets could proceed with recovery amid trade optimism, which in turn will derail demand for gold at some point.
In a wider picture, the downside risks for the global economy may support gold in 2019. After a break above $1,300, the prices will target the $1,303 that could be tough to overcome.