Gold prices slightly retreat during the Asian trading session, while modestly giving up some sharp gains it registered during the prior US trading session. Gold soared to a two-week high during the US trading session even as the dollar retreated as the result of the potential for renewed trade talks between the US and China.

Just days after U.S. President Donald Trump threatened to step up a trade war by imposing tariffs on $200 billion worth of Chinese goods proposal that has already gone through public consultation but also on a further $267 billion. Those tariffs, if activated, would be in addition to tariffs already in place on around $50 billion worth of Chinese goods and would cover more than the total Chinese exports to the U.S.

US officials have stated on Wednesday that they had sent an invitation to their counterparts in China, while US Treasury Secretary Steven Mnuchin is reportedly working to meet with top Chinese officials, including Vice Premier Liu He, who is Chinese President Xi Jinping’s top economic adviser.

Gold prices currently trade higher reaching the strongest levels of the sessions after data showed that U.S. consumer prices rose less than expected in August. The US Labor Department with its consumer price index advanced 0.2%, below expectations for an increase of 0.3%. Excluding the volatile food and energy components, the CPI edged up 0.1%, below forecasts for a gain of 0.2%.

Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure precisely because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less. The Central bank is expected to increase interest rates at its September 25-26 policy meeting, which has already increased rates twice in 2018 so far.

Gold 1H Chart
Gold 1H Chart

Bullish Outcome: Above 1211.55 Bollinger band, look for further upside with 1215.26 and 1223.80 in extension.

Bearish Outcome: Below 1211.55 middle Bollinger band, look for further downside with 1207.84 and 1201.00 in extension.