Gold consolidates in a range, holds steady near $1700 mark
FXStreet News

Gold consolidates in a range, holds steady near $1700 mark

  • Gold lacked any firm directional bias and remained confined in a range around $1700 mark.
  • A modest pullback in the equity markets underpinned the commodity’s safe-haven demand.
  • A sudden pickup in the USD demand turned out to be a key factor that capped the upside.

Gold seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, around the $1700 mark.

A combination of diverging forces failed to provide any meaningful impetus to the precious metal and led to a directionless/two-way price action for the second consecutive session on Tuesday.

The spillover effect from a selloff in the European bond market dragged the equity markets lower in the last hour and turned out to be a key factor lending some support to the safe-haven commodity.

The positive factor, to a larger extent, was offset by the latest optimism over the re-opening of economies in some part of the world and a sudden pickup in the US dollar demand.

A stronger greenback tends to dent demand for the dollar-denominated commodity, albeit the downside is likely to remain limited amid escalating US-China tensions over the origin of the coronavirus.

This coupled with persistent uncertainty over the severity of the economic damage caused by the coronavirus-induced lockdowns might further help limit any meaningful downside, at least for now.

Hence, it will be prudent to wait for some strong follow-through selling, possibly below last Friday’s swing low near the $1670 level, before positioning for any further near-term depreciating move.

Moving ahead, market participants now look forward to the release of the US ISM Non-Manufacturing PMI, which might influence the USD price dynamics and produce some meaningful trading opportunities.

Technical levels to watch


FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.