Metals Consolidate Previous Gains, Focus on Trump’s War and May’s Resign

Mauricio Carrillo

Gold and other metals such as silver and copper are trading in consolidation mode on Friday as investors are digesting news related to the trade war and the resignation of Theresa May as England Prime Minister.

Gold is consolidating levels above 1,280 as risk aversion eases amid Trump’s comments on a quick trade war. Silver is trading slightly down on Friday after Thursday rally. XAG/USD is now testing 14.60 resistance.

Copper rebound from 2.6500 found resistance at 2.7010, which is containing the recovery. Palladium is on recovery path on Friday as the unit is reversing three days of losses, but the 20-day moving average is acting now as resistance.

Platinum is trading positive on Friday in what it looks like a profit-taking movement after two negative days. The pair is holding above the 800.00 area.

Finally, the dollar index was rejected by the 98.40 level on Thursday, and it is now trading negative on Friday, but the move is small.

Trump and his quick war

US president Donald Trump told journalists on Thursday afternoon that he expects the trade war between the United States and China to end swiftly and it could be over quickly.

The problem is that Wall Street and all other market experts are becoming convinced that the trade war will be slow, and it only can get worse.

Experts think now that the trade war could last more than initially expected and it could hurt the economy harder than it did this month. They see an impact on the second half corporate profits and global economy.

Theresa May announce her resignation

United Kingdom Prime Minister Theresa May announced she would step down from her position on June 7 in an emotional speech outside 10 Downing Street.

“I will shortly leave the job that it has been the honor of my life to hold. The second female prime minister but certainly not the last,” May said.

GBP/USD reacted positively to the announcement, and it is now posting gains on Friday after three days of drops.

Gold consolidates levels above 1,280

XAUUSD daily chart May 24

After performing the first daily gain in even trading sessions on Thursday, Gold is currently trading negative but in consolidation mode as investors are digesting the quick war commented by Donald Trump.

The movement on Thursday was fueled by risk aversion due to the belief that the trade war is here to stay, and it will much worse than initially anticipated.

Currently, XAU/USD is trading 0.05% positive on Friday at 1,285. The pair is trading in consolidation mode above the 1.280 and the 1,270 levels.

“Gold has found a very good support around $1,270. There was some short covering after the (weak US) data that pushed prices up,” Peter Fung, head of dealing at Wing Fung Precious Metals, said to CNBC. “However, the upside could be limited as $1,290 is acting as a strong resistance.”

To the upside, gold will find resistance at 1,290, where the 50-day moving average is. Above there, May 14 high at 1,303, and April 10 high at 1,310.

Silver jumps above 14.60

Silver Daily chart May 24

XAG/USD is trading flat on Friday as the unit is consolidating levels after the last rally performed on Thursday. Silver is testing now the 14.60 area.

After three days of sideways between 15.40 and 14.50, silver jumped to 14.65 on Thursday amid risk aversion. Then, the pair has been trading in consolidation mode just around that level.

Currently, silver is trading 0.05% negative on the day at 14.67. Technical indicators are suggesting more room for the upside. In that framework, next resistances are at 14.70, 20-day moving average, 14.90, 200-day MA and 15.10, where the unit was contained the second part of April.

This article was originally posted on FX Empire