Gold Price Analysis: XAU/USD bulls and bears jostle below $1,730
- Gold prices extend weakness from $1,730.54 with $1,723.86 being the latest low.
- Risks of the coronavirus resurgence failed to boost safe-havens amid the US dollar rise.
- Fed Chair Powell reiterated cautious statements in testimony.
- US Secretary of State Mike Pompeo’s visit to Hawaii, pandemic updates can offer immediate direction amid a light calendar.
Gold prices drop to $1,725.70 during the early Wednesday morning in Asia. The yellow metal seesawed the previous day, closing around $1,728 with mild gains, as the mixed plays between the risk catalysts and the US dollar confused the bullion traders.
The metal’s early-Tuesday rise could be attributed to the market’s reaction to the US Federal Reserve’s bond purchase program and intense coronavirus (COVID-19) conditions in Beijing. However, the gains couldn’t last past-European session as the US dollar recovered some of its latest losses backed by strong Retail Sales numbers.
The record percentage increase in the US Retail Sales, by 17.7% MoM in May, dimmed the cautious testimony by the Fed Chair Jerome Powell. The resulted moves also helped escalate the risk-on sentiment.
While portraying the market mood, Wall Street managed to post another positive day whereas the US 10-year Treasury yields also gained by four basis points (bps) to 0.74% at the end of Tuesday’s trading session.
Though, the trading sentiment seems to have soured off-late as headlines from Beijing suggest higher risks of a virus outbreak 2.0. Additionally, US Secretary of State Mike Pompeo’s visit to Hawaii, to meet Chinese diplomats, leads to cautious mood the traders. As a result, the S&P 500 Futures drop 0.40% to 3,103 as we write.
Hence, while tensed situation concerning the virus and the US-China relations favor the commodity’s upside, US dollar strength and the market’s broad risk-on sentiment challenge the buyers.
Moving on, the risk catalysts are likely to keep the driver’s seat amid the fears of the pandemic’s resurgence. Also likely to direct the precious metal’s moves could be US Secretary of State Mike Pompeo’s visit to Hawaii, to meet the Chinese diplomats. On the economic front, the second round of Federal Reserve Chairman Jerome Powell and the US housing data might offer additional directives to gold traders.
Technical analysis
A lower high formation since last Thursday, preceded by the repeated failures to refresh the monthly high, favor the sellers below $1,745.12. However, a 50-day SMA level around $1,714 could challenge the short-term bears.