- Summary:
- Silver (XAGUSD) remains unmoved as President Trump signs Hong Kong bill into law, irking Beijing and threatening the signing of a US-China trade agreement.
US-China trade relations may have come under more strain as US President Trump signed the so-called “Hong Kong bill” into law, shortly after its passage by the US Congress.
Hong Kong has always enjoyed a special trade status with the US, which insulate it from sanctions on Beijing passed by the US. The new law will make it compulsory to review Hong Kong’s special trade status annually to see if it will continue to enjoy this status. The assessments will check if China’s administration of the territory is infringing on fundamental human rights or undermining its autonomy. The new law also prohibits the sale of crowd control munitions such as rubber bullets and tear gas to the Hong Kong police.
Understandably, this move has irked Beijing which has called the legislation “extremely abominable”, while promising “firm counter measures”. Beijing has also summoned US envoy Terry Branstad to a meeting where it is expected that it will demand an immediate stop to what it considers meddling in its internal affairs.
Many observers have pointed out that the signing of the law and Beijing’s furious reaction could further jeopardize attempts at obtaining a concrete US-China trade deal, especially as the “Phase 1” component is yet to be signed.
XAGUSD Technical Outlook
Silver price activity continues to occur within the bearish flag formation on the daily chart, as the asset remains fairly unfazed by the latest happenings on the US-China trade front. However, today is Thanksgiving holiday in the US and markets there are closed. This may be a factor in the lackluster movement of XAGUSD on the day.
The previous playbook remains the same. A break below the bearish flag with a decisive 3% penetration close opens the door for a push to 16.67 and 16.13 (Jan 31 and Feb 20 highs as well as Aug 5 low), in that order.
Greater risk aversion could cause XAGUSD to push upwards, which takes the price to the upper flag border. A break above 17.25 (where the flag border intersects the Aug 7 and Nov 22 highs) would open the door towards the 18.247 resistance target (Sep 11 and Nov 4 highs). Such a move would invalidate the bearish flag.