Not getting tired of looking for the bottom, gold falls for five of the last six trading days. From the levels of January highs, precious metal lost more than 7.5% of its value under the influence of the strengthening dollar and the growth of yields on US Treasury bonds. Despite the seemingly favorable external background associated with the escalation of Washington's trade conflicts with Beijing, the analyzed asset can not come to its senses. As a result of the week ending June 19, speculators reduced net-longs for gold to the lowest level since early 2016.

Matters are not better with investment demand at all. The stocks of the largest specialized fund SPDR Gold Shares have fallen to the very bottom since August 2017. The indicator for the 12 largest ETFs tracked by Reuters has decreased by 3% since the beginning of the month, to 56.2 million ounces, which is the lowest value since July 2017. Investors react to the continuation of the cycle of normalizing the monetary policy of the Fed and turn a blind eye to the risks of a slowdown in the world economy under the influence of trade wars. Many of them prefer to stand aside: open interest on COMEX, measuring the number of open contracts, fell to the lowest level since 2016.

Dynamics of gold and the US dollar

However, the collapse in precious metal prices in April-June did not change the opinion of the bulls. Standard Chartered still expects growth in the direction of $ 1,400 per ounce before the end of this year, and TD Securities is confident that gold will be able to regain lost ground in the fourth quarter. The main reason is the depletion of the corrective movement to the USD index. Wealth Management believes that the dollar reached its peak at the beginning of 2017, and what we are seeing is nothing more than a pullback in the "bearish" trend.

Precious metals reacted poorly to the factor of the trade war because firstly, investors do not yet see its concrete threat to the world economy, and secondly, such driver as the dispersal of US GDP and the aggressive monetary restriction of the Fed under the influence of tax reform in the US, outweighs it. Nevertheless, the further escalation of the conflict between the States and the Middle Kingdom will increase interest in the safe-haven assets.

Of course, when the markets choose between a well-known divergence factor in the monetary policy of central banks and such an unexplored driver as protectionism, the dollar will be in hot water. Among investors, there is no common opinion on how to properly play out the trade wars. Someone says that the yield on Treasury bonds is falling and the historical experience is a "bearish" factor for the USD index. Someone, on the contrary, argues that reducing the deficit of foreign trade with the help of import duties and slowing down of US competitors will give it the necessary support.

Technically, gold continues to implement the pattern "Double top" on the daily chart. Quotations approached the target of 88.6% which is at arm's length. Their entry into the convergence zone $ 1250-1263 per ounce (the upper limit - targeting 161.8% for the AB = CD pattern) increases the risks of a pullback.