Spot gold is consolidating within the recent range. The yellow metal is being weighed as yesterday’s dollar losses are retraced amid the latest uptick in trade tensions.


Yesterday the Trump administration revealed the latest list of $16 bln worth of Chinese imports that would be slapped with a 25% tariff. The Chinese announced retaliatory 25% tariffs on $16 bln worth of U.S. goods earlier today.


Interestingly, China reported that their exports grew at a faster than expected 12.2% y/y in July, despite the developing trade war with the United States. Exports to the U.S. edged down to 19.3% of total exports, versus 19.7% in June. China’s trade surplus with the U.S. fell by 3.1% to $28.08 bln, versus a record high $28.97 bln in June.


As the trade war escalates, that surplus is likely to fall further. However, the Chinese have been at least somewhat successful in muting the impact by allowing the yuan to depreciate. Safe-haven flows into U.S. Treasuries have also provided a boost to the dollar.


 The dollar index has retraced all of yesterday’s losses and seems poised to make another run above 95.50. There have been four rejections from above 95.50 dating back to 21-Jun. While that may seem indicative of a topping pattern, the DX has not been able to gain any traction on the downside either.


While gold continues to hold above the key $1200 level, six consecutive sessions of lower daily highs — tracking the downward trending 9-day MA (1215.40 today) attests to the continued vulnerability of this market. A close above the 20-day MA (1224.16 today) is still needed to lend some credence to the bottoming scenario.


Silver has posted three consecutive lower daily highs, as it continues to consolidate above the 15.22/17 lows. As noted yesterday, recent price action has the appearance of a continuation pattern, more so than a bottoming pattern.


A close above the 20-day MA (15.50 today) would ease short-term pressure on the downside and favor a challenge of resistance at 15.67 (26-Jul high). The latter is seen as the confirmation point for the small double bottom and penetration would highlight the $16 zone.


Platinum continues to trade in a choppy manner within a narrowing range. The recent corrective highs at 844.13/845.27 must be cleared to set a more favorable short-term tone, but probably only if gold makes a move to the upside. For now, the dominant trend remains negative


Palladium pushed convincingly back below $900 in earlier trading. The 50% retracement level of the recent correction has been exceeded, suggesting potential the 61.8% Fibonacci support at 890.66. If this level gives way as well, the 870.00 low from 20-Jul would be back in play.


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