FxWirePro: Gold recovers on US-China trade tension, good to sell on rallies

Gold has recovered more than $20 from its 21/2 month low on a slight escalation of US-China trade war.US Chief economic advisor said that trade deal with China is in final stages. The ministry of commerce in Beijing stiff on-demand US to lift tariffs. It hits a high of $1474 and is currently trading around $1465.

Fed Chairman Powell hinted at testimony that central bank will be keeping rates in coming months  DXY has started to decline after forming a top around 98.45level, any convincing break below 97.75 targets 97.40/97. Markets eye US-retail sales data for further direction.

According to the CME Fed watch tool, the probability of keeping rates unchanged has increased from 95.6% to 97.8%, the chance of 25 bps cut declined to 2.2% from 4.4%.

US 10-year yield has lost more than 6.5% after hitting a high of 1.97%. The spread between 10 and 2-year yield has narrowed to 23 bps from 27 bps.

Technically, major support is around $1450, any break below confirms bearish continuation, a decline till $1430/$1400 likely.

The major resistance is around 1480, any indicative break up targets $1500/$1525. Major trend reversal only beyond $1555.

It is good to sell on rallies around $1468-69 with SL around $1478 for the TP of $1430/$1400.