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  • Gold prices trim late-Tuesday losses while bouncing off $1,963.36.
  • Risk reset joins the technical break to keep the buyers hopeful.
  • US-China tussle, ambiguity over American relief package question ISM Manufacturing PMI-led bounce of the US dollar.
  • Pacific majors are slated for data/events in Asia, nothing new for risk.

Gold prices keep late Tuesday’s recovery moves while picking up the bids near $1,971 amid the pre-Tokyo open trading on Wednesday. In doing so, the yellow metal prints a four-day winning streak and stays past-21-day SMA cleared after a two-week gap the previous day. Although risk recovery and persistent US dollar weakness helped the bullion in recent days, the latest swing in market sentiment seems to challenge the buyers.

Bulls firming up the grip…

Even if the US dollar manages to bounce off 28-month low, mainly due to the strong ISM Manufacturing PMI, greenback bulls aren’t convinced amid looming uncertainty over the US aid package to combat the coronavirus (COVID-19). Also negatively affecting the US currency is the Sino-American tension as cited by the US Secretary of State Mike Pompeo off-late. Furthermore, weak US treasury yields, down two basis points (bps) the previous day, are also weighing on the greenback and helps gold in turn.

Though, rallying equities are something that challenges the bulls by offering another big investment avenue with the recent record high in the S&P 500. Also on the same side are the vaccine hopes. Global pharmaceutical companies are leaping towards final tests with one of the top candidates developed by AstraZeneca beginning its trials starting from today.

Against this backdrop, the buyers may cheer the recent breakout of 21-day SMA, the first in two weeks, while concentrating on the major negatives for risk including COVID-19 pessimism and US-China issues. However, any extension of the US dollar recoveries could adversely impact the yellow metal.

While looking for the same, comments from the Fed’s Williams and the US ADP Employment Change, expected 950K versus 167K prior, will be the key to watch.

Technical analysis

Unless breaking down the $1,967 level comprising 21-day SMA, the bulls may target August 18 top near $2,015.


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