- The prevalent risk-off mood assisted the safe-haven commodity to regain traction on Thursday.
- Concerns about rising COVID-19 cases, grim economic outlook weighed on investors’ sentiment.
- A stronger USD might keep a lid on any strong gains ahead of a slew of important US macro data.
Gold edged higher through the early European session and was last seen trading near the top end of its daily trading range, just below the $1770 level.
Following an intraday dip to the $1753 area, the precious metal managed to attract some dip-buying and has now reversed the previous day’s losses. Gold paused its recent bullish trend and witnessed a modest pullback from eight-year tops on Wednesday amid a strong run-up in the US dollar.
However, the prevalent weaker tone around the equity markets extended some support to the commodity’s perceived safe-haven status. The markets turned into risk-off mode amid worries over a surge in new coronavirus cases and fading prospects of a sharp V-shaped global economic recovery.
The market concerns were further fueled by a grim economic outlook from the International Monetary Fund (IMF). In its latest economic forecasts, the IMF projected a deeper recession in 2020 and now expects the global output to contract by 4.9% in 2020 – 1.9% below -3% April forecast.
Meanwhile, the greenback added to the overnight strong gains, which might turn out to be the only factor that might keep a lid on any runaway rally for the dollar-denominated commodity. Nevertheless, the fundamental backdrop still supports prospects for a further appreciating move for the metal. Hence, a subsequent move beyond the multi-year high level of $1779, towards the ambitious $1,800/ounce target, remains a distinct possibility.
Moving ahead, market participants now look forward to a slew of important US macro data for some fresh impetus. The US economic docket highlights the release of Initial Weekly Jobless Claims and Durable Goods Orders. This, along with the final Q1 GDP report from the US might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.