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Gold Price Analysis: XAU/USD buyers struggle to retake control

  • Gold prices seesaw around $1,955 following its U-turn from $1,940.
  • Risk-off moves gain momentum amid a plethora of headlines from the US.
  • Virus woes, fiscal package uncertainty hit the market sentiment off-late.
  • Downbeat prints of US and German GDP followed dovish Fed the previous day, China PMI in focus.

Gold prices ease to $1,957 during the early Asian session on Friday. The yellow metal earlier surged from $1,939.66 before taking a U-turn from $1.960.32. In doing so, the quote managed to portray the first negative daily closing in 10-days on Thursday. Despite the reversal of the US dollar’s early-day gains, not to mention the US dollar index (DXY) drop to the fresh low since May 2018, the bullion failed to rise much off-late while waiting for more clues.

Bulls catch a breather despite broad pessimism…

Be it the likely delay in the much-awaited US coronavirus (COVID-19) aid package or the surge in the pandemic, not to forget chatter about the delay in American Presidential Election and devastating GDP figures, nothing was positive to the risk-tone sentiment.

The latest virus update from the US suggests that Texas marked the record deaths of 322 with a 62% rise in hospitalization on Thursday. This propels the total count of new cases in American top 4.5 million. US President Donald Trump showed worries for the rapid increase but refrained from entertaining the case of a long-term shutdown. Elsewhere, the UK announced local lockdowns and figures China, Tokyo and Victoria have also been disappointing off-late, which in turn increases the safe-haven demand of the metal.

Also adding to the buying strength could be US President Trump’s push for the delay in Presidential Election, up for November, while citing mail-in ballots. Furthermore, the US Senate members are showing mixed signs concerning the trillion-dollar worth fiscal package as the White House Chief of Staff Mark Meadows recently said that he is not even optimistic about any bill in the near-term.

While portraying the risk-tone sentiment, S&P 500 Futures drop 0.10% after Wall Street marked mixed closing for Thursday. Further, the US 10-year Treasury yields revisited the all-time lows marked in March the previous day.

On the contrary, receding demand from one of the largest customer, India, as well as vaccine hopes counter the precious metal bulls.

Moving on, China’s official PMI numbers for July will be the key to watch for immediate direction. The headlines NBS Manufacturing PMI is expected to recede from 50.9 to 50.7 whereas Non-Manufacturing PMI may also weaken from 54.4 to 51.2. Should the data marks downbeat outcome, it will join the league of the US and German GDP, which in turn offer fresh support to the precious metal buying.

Technical analysis

While observing the trading pattern of gold prices in last three days, it is known that the bullion flashed lower high formation and recedes the upside momentum. As a result, short-term sellers could eye the previous record high near $1,921 as the immediate target unless the quote successfully breaches $1,981. Should the precious metal cross $1,981, $2,000 will pop-up on the bulls’ radars.


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