- Gold prices ease from $1,771.14, the highest levels since October 2012.
- Buyers await fresh clues to challenge the multi-year top.
- Optimism prevailed earlier amid hopes of further stimulus and no hardships for the US-China trade deal joined upbeat PMIs.
- Trade tensions are back in focus, virus woes offer background music.
Gold prices step back from the multi-year high to near $1,770 amid the early Wednesday morning in Asia. The bullion seems to catch a breather as risk-negative headlines from China’s Global Times and the US State Department’s negative signals for Asian tire manufacturers suggest a renewal of global trade war.
China’s Global Times accused the US of harming the phase-one deal, while also citing negative attitude towards Huawei, to renew the fears of Sino-American trade war. Additionally, the US Commerce Department called for an investigation into the imports of vehicle tires from South Korea, Taiwan, Thailand and Vietnam to determine whether they are being sold at less than fair value, per Reuters. It should also be noted that the surge in the coronavirus (COVID-19) figures from southern US states keep the risk-on mood chained.
The precious metal surged the previous day amid broad market optimism weighing down the US dollar and increasing appetite for gold. Among the upbeat catalysts favoring the market’s optimism were the US policymakers’ efforts to convince traders about the phase-one deal with China. Further, key global economies printed upbeat preliminary activity numbers for June and helped favor the bulls whereas hopes of a $1.5 trillion infrastructure plan from the US seem to add strength to the trade-positive environment. Additionally, further easing of the lockdown restrictions by the UK PM Boris Johnson offered another factor to support the strength of the risk-tone sentiment.
Amid all these catalysts, Wall Street marked another positive day with US 10-year Treasury yields. S&P 500 Futures also follow the footsteps while flashing 0.14% gains to 3,117 as we write.
Considering the return of trade fears, amid pandemic wave 2.0 speculations, any more negative headlines could help the US dollar to recover its latest losses. As a result, Gold prices might ease further from the key levels unless the greenback fails to react to the risk news.
Technical analysis
While buyers are targeting further rise towards October 2012 top near $1,785, sellers will look for entries only if the quote slips below $1,731 level comprising an ascending trend line from June 05.
Share
