Gold drops to 2-week low as Asia responds to recent risk-on, 100-day SMA on radar

• Asian traders received Friday’s risk-on with the Nikkei’s surge and a dip in safe-havens.
• 100-day SMA could trigger the bullion’s U-turn considering recent statements from the IMF and worries over the US-China trade talks.

Gold drops to the lowest levels since April 05 as it trades near $1290 during early Monday. Optimism surrounding global equity markets near late-Friday seems well received by the Asian traders so far since the week-start. Though, recent downbeat comments from the IMF and worries concerning the US-China trade discussions highlight the importance of 100-day SMA.

In addition to trade and credit data from China, positive start to the US earnings season led by JP Morgan and Wells Fargo kept the risk-on mood intact on Friday.

Asian traders took advantage of the Friday moves by fuelling the Nikkei 225 to a five-month high near 22,150 with more than +1.25% gains.

10-year treasury yields on the US government bonds remained little changed around 2.56%, also near four-week high.

Despite recent risk-on sentiment, the International Monetary Fund (IMF) continues to highlight downside risks to the global economy. Also, trade talks between the US and China are heads toward the currency manipulation points, a tough thing to discuss for both the economies.

With this, global traders might reassess risk sentiment in order to determine near-term trade moves, which in turn could propel the bullion’s safe-haven demand.

Gold Technical Analysis

Failure to slip beneath 100-day simple moving average (SMA) during early-month decline signal brighter chances for the precious’s U-turn from $1287, if not then $1280 and $1276 may flash on sellers’ radar.

On the flipside, $1293, 50-day SMA level of $1306 and a two-month-old descending trend-line at $1311 may limit near-term upside, a break of which can recall $1317 and $1321 on the chart.