- Gold prices print three-day winning streak, consolidate around four-day high.
- Fed policymakers rule out negative rates for now but US President Trump favors it.
- US-China tension escalates, the risk of virus wave 2.0 also weigh on the risk-tone sentiment.
Gold prices seesaw near the four-day top of $1,718.35 while taking rounds to $1,716.50 amid the initial Asian session on Thursday. The bullion recently gained bids after US President Donald Trump renewed calls of the negative Fed rates. The move by the US President plays against the Fed policymakers’ comments on Wednesday that ruled out any such actions likely for the time being.
While marking his disagreements (unsurprising) with Fed Chairman Jerome Powell, US President Trump said, “I like negative rates.”
On Wednesday, the Fed Chair Powell said that negative rates are not something Fed is looking at. Reinforcing the comments was Cleveland Federal Reserve President Loretta Mester who said, “Negative rates not a tool we think we would use.”
Given the mixed signals concerning the future of the Fed rate adds to the risk aversion while also favoring the bullion’s safe-haven demand.
Adding to the risk-off buying could be the US-China tussle. The recent wave of verbal attacks from China came after US President Trump stopped Federal retirement savings fund from diversifying into the Chinese stocks.
Furthermore, rising coronavirus (COVID-19) figures from Germany, China and South Korea adds to the fears that the wave 2.0 will stop global economies from returning to the track.
Also exerting downside pressure on the risks could be the comments from the US Treasury Secretary Steve Manuchin who said to the Fox that this will be a pretty bad quarter.
Amid all these plays, the US 10-year Treasury yields remain downbeat below 0.70% while Wall Street kept the red on Wednesday. Further, the S&P 500 Futures also flash mild losses of near 0.10% by the press time.
Looking forward, gold traders will be more interested in clues relating to the Fed’s rates as well as US-China story while also keeping eyes on the virus data/updates.
Technical analysis
A daily closing beyond a one-month-old descending resistance line, currently near $1,719/20, becomes necessary for the precious metal to aim for the April month high of $1,748, failing to do so can recall sub-$1,700 area on the chart.
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