- Gold witnessed some follow-through selling for the second straight session on Wednesday.
- Optimism over global economic recovery remained supportive of the rally in equity markets.
- The upbeat market mood was seen exerting some pressure on the safe-haven precious metal.
- The prevalent USD selling bias turned out to be a key factor that helped limit deeper losses.
Gold maintained its offered tone through the mid-European session, albeit has managed to pare some of the early losses to the $1713 area.
The equity markets across the world extended their recent bullish run amid the growing optimism over a sharp V-shaped recovery for the global economy. This, in turn, weighed on traditional safe-haven assets and led to the second day of a negative move for the precious metal.
The commodity retreated further from near two-week tops set on Tuesday and dropped to three-day lows. However, heightened concerns over a further escalation in the US-China tensions and civic unrest across the US over the death of George Floyd helped limit deeper losses.
This coupled with the sustained US dollar selling further extended some support to the dollar-denominated commodity. The yellow metal attracted some dip-buying ahead of the $1710 level, though the attempted bounce lacked any strong bullish conviction.
The metal was last seen trading around the $1720 region as market participants now look forward to the US macro data for a fresh impetus. Wednesday’s US economic docket highlights the release of the ADP report on private-sector employment and ISM Non-Manufacturing PMI.
The data might influence the USD price dynamics and produce some short-term trading opportunities during the early North American session. The key focus, however, will remain on Friday’s closely watched US monthly jobs report, popularly known as NFP.
Technical levels to watch
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