Gold clings to gains near session tops, above $1720 level ahead of US data

• Worsening US-China relations assisted gold to build on the overnight bounce from two-week lows.
• Some renewed USD weakness provided an additional boost to the dollar-denominated commodity.
• The positive move seemed rather unaffected by the optimism over a potential COVID-19 vaccine.

Gold built on its steady intraday positive move and refreshed daily tops, around the $1726 region during the mid-European session.

The precious metal built on the previous day’s late rebound from sub-$1700 levels, or two-week lows and gained some follow-through traction on Thursday. Concerns about escalating diplomatic tensions between the United States and China turned out to be one of the key factors that forced investors to take refuge in traditional safe-haven assets, like gold.

The US Secretary of State Mike Pompeo on Wednesday Hong Kong was no longer autonomous from China and does not qualify for its special status under the US law. This comes after the US President Donald Trump warned a strong reaction to China’s planned national security law for Hong Kong and the dragon nation’s threat of countermeasures against any US actions.

This coupled with some renewed US dollar weakness provided an additional boost to the dollar-denominated commodity. However, the recent optimism over a potential COVID-19 vaccine and hopes of a sharp V-shaped recovery for the global economy might keep a lid on any runaway rally for the yellow metal.

Moving ahead, market participants now look forward to a slew of important US macro data, which might influence the USD price dynamics and produce some short-term trading opportunities. Thursday’s US economic docket highlights the release of the second estimate of Q1 GDP, Durable Goods Orders for April, Initial Weekly Jobless Claims and Pending Home Sales data.

Technical levels to watch