- Resurgent USD demand prompted some fresh selling around gold on Thursday.
- The USD stood tall following the release of upbeat US third-quarter GDP report.
- The US economy expanded by 33.1% annualized pace as against 31% expected.
Gold extended its sharp intraday fall through the early North American session and was seen hovering near one-month lows, around the $1865-67 region post-US GDP.
The precious metal failed to capitalize on its early uptick, instead met with some fresh supply near the $1885 region and drifted into the negative territory for the second straight session on Thursday. The downtick was exclusively sponsored by a sudden pickup in the US dollar demand, which tends to undermine demand for dollar-denominated commodities, including gold.
Despite the uncertainty about the actual outcome of the US presidential election next week, the greenback retained its status as the global reserve currency amid concerns about the potential economic impact of the ever-increasing coronavirus cases. The greenback was further supported by Thursday’s stronger-than-expected US GDP report for the third quarter.
According to the advance estimate, released by the US Bureau of Economic Analysis this Thursday, the US economy expanded by 33.1% annualized pace during the third quarter of 2020. The marks a reversal of the previous quarter’s coronavirus-induced contraction of 31.4% and also surpassed consensus estimates pointing to a growth of 31%.
Apart from a broad-based USD strength, a modest rebound in the US equity futures further dented the precious metal’s safe-haven demand and contributed to the intraday slide. Given the overnight slide below 100-day SMA for the first time since March, the emergence of some fresh selling on Thursday favours bearish traders and supports prospects for further weakness.
Technical levels to watch
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