- Gold stays under pressure for the second consecutive day.
- The bullion shows a little reaction to market fears concerning the US-China trade relations, Brexit.
- Broad USD recovery could be attributed to the moves, US data came in stronger than expected.
Gold prices remain on the back foot for one more day while flashing $1,475.50 as a quote during Wednesday’s Asian session. The safe-haven metal failed to benefit from the market’s risk-off the previous day as the US Dollar (USD) recovered heavily on upbeat data, Fedspeak.
The phase-one deal failed to tame the US-China trade stalemate as markets fear the continuation of differences between the world’s two largest economies. About this, Fitch recently said that phase one US-China trade deal alone unlikely to eliminate uncertainty given prolonged phase two negotiations on structural issues. Further, US diplomats like Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer have been praising the benefits of phase-one to the economy while giving credits to the US President Donald Trump.
On the other hand, the UK PM Boris Johnson announced readiness to step out of the European Union (EU) with the transition period not extending beyond 2020. The bill for the same will soon be presented in the Parliaments for voting where Conservatives hold the majority. Even so, global rating giant S&P conveys optimism surrounding the UK economy due to the Conservatives’ landslide victory during Thursday’s election.
While trade/Brexit headlines shook the market’s risk sentiment, the US 10-year treasury yields and Gold showed less reaction, which could be because of the USD recovery. Upbeat data from the US and comments favoring the present monetary policy and growth stand by the Federal Reserve (fed) officials are likely reasons for the greenback’s strong gains.
Considering the absence of major data on the US economic calendar, markets will keep eyes on trade/Brexit headlines for fresh impulse. Additionally, comments from the Federal Reserve Governor Lael Brainard and the Federal Reserve Bank of Chicago President Charles Evan will also be observed closely.
Technical Analysis
Sustained failure to cross 50-day Simple Moving Average (SMA), currently around $1,478, drags the bullion towards a 21-day SMA level of 1,467. However, the precious metal’s further declines can be limited by a month-long ascending trend line at 1,459 now.
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