- Gold added to the overnight losses and witnessed some follow-through selling on Friday.
- The downfall seemed rather unaffected by a fresh wave of the global risk-aversion trade.
- Technical selling below $1690 support area, a modest USD uptick exerted some pressure.
Gold remained under some selling pressure for the second straight session on Friday and dropped to 1-1/2 week lows in the last hour.
The precious metal failed to capitalize on this week’s attempted bounce from the $1690 support area and witnessed a dramatic turnaround from the $1722 supply zone on Thursday. The pullback extended through the early European session on Friday and seemed rather unaffected by deteriorating risk sentiment, which tends to underpin demand for traditional safe-haven assets, including gold.
The latest optimism over the successful stage 1 clinical trial of Gilead Sciences’ antiviral drug remdesivir to treat COVID-19 patients and re-opening of economies in some parts of the world turned out to be short-lived. Instead, worries over the economic fallout from the coronavirus pandemic weighed on investors’ sentiment, albeit did little to lend any support to the precious metal.
Meanwhile, the signs of easing bearish pressure surrounding the US dollar seemed to be one of the key factors denting demand for the dollar-denominated commodity. Friday’s follow-through weakness could further be attributed to some technical selling on a sustained break below the $1690 horizontal zone, setting the stage for a slide back towards last week’s swing low, around the $1659 region.
Later during the early North-American session, market participants will look forward to the US economic docket – highlighting the release of the ISM Manufacturing PMI. This along with the USD price dynamics and developments surrounding the coronavirus saga will play a key role in producing some short-term trading opportunities on the last day of the week.
Technical levels to watch
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