GOLD PRICE ANALYSIS: CHINESE YUAN AND GOLD REMAIN IN LOCKSTEP

GOLD PRICE NEWS AND ANALYSIS

• Spot gold continues to slump as USDCNH drives the move.
• Gold support at $1,204 may hold.

GOLD PRICE ANALYSIS – CHINESE YUAN WEAKNESS CONTINUES TO HURT GOLD BULLS

The price of gold has fallen nearly $150/oz. since touching a $1,365/oz. high just over three months ago as tightening US monetary policy and a weak offshore Chinese Yuan continue to hurt bullish gold investors. The CNH-gold correlation remains tight and is unlikely to be broken in the short-term, especially with tighter US monetary policy weighing on both asset classes. The Chinese Yuan is around 9% lower since US President Donald Trump ramped up trade tariff rhetoric, negating the overall effect of Trump’s tariffs on the Chinese economy. The ongoing US-China trade war will continue to be a driving force for both the Chinese Yuan and gold..

GOLD REMAINS STUCK IN A TECHNICAL DOWNTREND

WE HAVE NOTED BEFORE THAT GOLD IS STUCK IN A DOWNTREND STARTED ON APRIL 11 WHEN THE PRECIOUS METAL TRADED AT A HIGH OF $1,365/OZ. THE NEXT LEVEL OF SUPPORT REMAINS AT $1,204/OZ. AND IS LIKELY TO HOLD IN THE SHORT-TERM AND THIS ROUGHLY COINCIDES WITH THE POLITICALLY SENSITIVE USDCNH LEVEL OF 7.00. USDCNH CURRENTLY TRADES AT 6.8400. IF USDCNH HOLDS BELOW 7.00, GOLD MAY GET A SHORT-TERM BOOST, SOMETHING THAT WOULD PLEASE GOLD INVESTORS WHO REMAIN OVERWHELMINGLY LONG OF XAU.

SPOT GOLD (XAU) DAILY PRICE CHART (FEBRUARY 2017 – JULY 31, 2018)

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