Gold bulls probed near seven-year top amid US dollar pullback, risk-off

• Gold prices ease from the highest since October 2012.
• US dollar recovers the latest losses, Treasury yields, stock futures are down.
• IMF forecasts the global slowdown, ETFs keep piling amid risk-off.

Gold prices step back from the seven-year high to $1,726, down 0.10% on a day, while nearing the European markets’ opening on Wednesday. Although broad risk-off, coupled with the investment buying, keeps the bullion near the multi-month top, the recent US dollar pullback seems to compress the further advances.

The US dollar recovers some of its latest losses amid hopes, paved by US President Donald Trump, concerning the early re-opening of the world’s largest economy.

However, the surge in the global numbers of the coronavirus (COVID-19), near two million infections and over 150,000 deaths, suggest the risk-on is still far. Also weighing on the trading sentiment could be a market consensus that the US and the UK are still three to four weeks away from the peak.

As a result, the US 10-year Treasury yields and the stock futures remain under pressure with mild losses.

On Tuesday, the International Monetary Fund (IMF) cited fears of global slowdown while revising its 2020 GDP forecast to -3.0%. Further to support the bullion, the Exchange Traded Funds (ETF) are on their buying spree. As per the Livemint, “Gold exchange-traded funds or ETFs continued to see inflow. The holdings SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.8% to 1,017.59.”

Even if the virus updates could keep the propelling the bullion prices towards the fresh multi-year tops, US Retail Sales and Fed’s Beige Book may offer intermediate guidelines.

Technical analysis

October 2012 high surrounding $1,796/97 remains on the bulls’ radar unless gold prices decline below $1,700 on a day.