Gold moved to the red zone during the Asian session on Monday amid rising tensions between the US and China. In this situation, investors prefer USD as the main protective asset. Now we see a repetition of the 2018-2019 situation when the trade conflict between the United States and China contributed to the strengthening of the USD and weakening of gold.
After China submitted a bill on national security in Hong Kong, numerous protests and clashes with the police resumed in the city. Dozens of people are detained. The bill provoked a strong reaction in the United States. On Sunday, White House National Security Advisor Robert O'Brien announced the possible imposition of new sanctions against China if the bill is passed. In response, Chinese Foreign Minister Wang Yi stated that the United States will not be able to change China's domestic policy with sanctions and threats.
Today is the Memorial Day holiday in the US. The country's financial markets will be closed, so experts predict a fairly quiet trading. The market will be influenced mostly by news of geopolitics.
Regarding the chart today it is worth highlighting the level of 1725.00. This is a key intraday support level. A breakdown of this mark will be a signal of the development of a downward movement in the direction of the levels of 1715.00 and 1695.00.
Resistance Levels: 1738.00, 1750.00, 1765.00;
Support Levels: 1725.00, 1715.00.1695.00.
The main scenario - a consolidation in the range of 1725.00-1738.00.
An alternative scenario - a consolidation below 1725.00 and a decline towards 1715.00.
The current fundamental outlook is moderately negative. Within the daily framework, we would consider shorts from the levels of 1738.00 and 1750.00.