Gold trades above $1,320 ahead of US-China trade talks on Tuesday

• US-China trade talks starting on Tuesday and NAFTA among the main drivers for gold this week.
• Gold bulls find an intraday floor at $1,317/oz as they plan to retest the Asia highs at 1,322.
• Investors are taking profits on USD longs, seen as positive for gold.

Gold is trading at around $1,320 a troy ounce in data-light Monday’s trading. 

In Asia, the yellow metal moved higher from 1,317 to 1,322 then pulled back in most of the first part of the European session. At the start of the American session, traders found an intraday floor at the 1,317 level and are trying to push gold above the 1,320 level. 

The main geopolitical drivers for gold this week are likely going to be the US-China trade talks which are set to start on Tuesday and NAFTA (North American Free Trade Agreement). House Speaker Paul Ryan has set a NAFTA deadline for May 17. Additionally, the recent US withdrawal from the Iran nuclear deal is another geopolitical risk as the US is now at odds with Europe, China, and Russia. The recent decision can also increase tensions in the Middle-East. 

Meanwhile, the US Dollar Index, which is generally inversely correlated to gold is trading lower as market participants are taking profits on the multi-week long USD trade. 

Gold 4-hour chart

The medium-term trend is flat confined between the 1,300 and 1,366 range. Resistance is seen at the 1,326, 1,330 and 1,340 supply levels and while resistances are seen at 1,310 and 1,300 demand levels. Gold is trading above its 200-period simple moving average (SMA) on the 4-hour time-frame but below the 50 and 100-period SMA suggesting a mild upward bias.