Gold prices fell by half a percent on Monday, retreating from last week's two-month highs, as dollar strength and the easing of tensions between the United States and North Korea pushed prices lower.
Though North Korea's Liberation Day celebration on Tuesday could raise the temperature again, markets were relieved that the weekend passed without more inflammatory rhetoric. Meanwhile, the dollar broadly rose from last week's four-month lows against the yen and traded up against a basket of currencies. A lot of the negative news is priced into the dollar. That, combined with no real escalation in North Korea, should lead to lower gold prices. Some institutional investors expected that gold could hardly breach the resistance of $1,300, and would stay within the $1,200 to $1,300 range for the year.
New York Fed President William Dudley said on Monday that market expectations that the U.S. central bank would begin trimming its balance sheet were not unreasonable. He expects to raise interest rates once more this year if the economic forecast evolves in line with his expectations, reinforcing expectations that the Federal Reserve will hide interest rates within this year. The dollar rebounded after his remark.
On technical front, gold fell to around $1,281 from $1,291 on Monday. Since 2017, gold failed to breach above the key mark of $1,300, suggesting ample resistance under this level. Bullion is expected to remain on track the range between $1,200 to $1,300, with support at the 50-day and 100-day moving average. In the near and medium term, gold is expected to remain within the range of $1,250 to $1,300.
Silver fell 0.1 percent to $17.05 per ounce, having climbed last week to its highest since mid-June. On technical front, silver failed to cross over the heavy resistance of the 100-day and 200-day moving average since June 2017. Pullback is expected in coming sessions. On short-term trading strategy, investors shall follow that of gold and closely watch the geopolitical tensions between the U.S. and North Korea.

 
Dealing Room, ICBC Beijing Branch
Li Nan

Note: The information herein is provided for informational purpose only. You are liable for the risk incurred to the investments based on this information provided herein.