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  • Gold fails to keep the bounces off Wednesday’s low of $1,932.73, drops for the second day in a row.
  • US dollar strength becomes the main driver while gains in equities add strength to the selling pressure.
  • Worsening Sino-American relations, downbeat global economics fail to put a floor.
  • US Jobless Claims, ISM Services PMI will be eyed ahead of Friday’s NFP.

Gold prices remain depressed around $1,940 during the pre-Tokyo open on Thursday. The yellow metal marked the biggest losses since August 19 the previous day as the US dollar index (DXY) rose for the second day. Adding to the quote’s weakness could be another record high of the S&P 500. In doing so, the bullion prices pay a little heed to the on-going Sino-American tussle as well as the recently downbeat economics from Australia, China and the US.

US dollar moves are the key…

Although global central bankers including the Fed, BOE, RBNZ and BOJ showed readiness to ease the monetary policy further, if needed, gold prices fail to pick-up demand. The reason could be traced from the DXY’s biggest gains in two weeks that push the greenback gauge further away from the 28-month low marked the previous day. The US dollar moves fail to portray weaker than expected ADP Employment Change as well as the US-China tussle.

The world’s two largest economies are at loggerheads since a long and the latest headlines, concerning further sanctions on Beijing diplomats by the US, push the Chinese embassy to say that the US moves are requiring Chinese diplomats to register ‘yet another unjustified restriction’.

Elsewhere, coronavirus (COVID-19) vaccine hopes are gaining momentum as AstraZeneca began final trials on Wednesday. Also fueling the optimism could be headlines from the COVAX group that stands for COVID-19 Vaccines Global Access, a joint global effort to develop, manufacture and distribute a vaccine to cure coronavirus and distribute it evenly, per the Australia and New Zealand Banking Group (ANZ).

Amid all these catalysts, Wall Street marked a stellar run-up but the US 10-year Treasury yields stayed pressured near 0.65%. For now, the S&P 500 Futures remain on the front foot around 3,580 after refreshing the all-time top with 3,586.38 the previous day.

While the risk catalysts are likely to remain on the driver’s seat, activity numbers from the US will be the key ahead of Friday’s Nonfarm Payrolls (NFP). Although the recently downbeat ADP print, 428K versus 950K forecast, suggests a further weakening of the employment numbers and upcoming losses of the USD, any positive surprises will be welcomed with zeal, which in turn will exert additional downside pressure on gold prices.

Technical analysis

A three-week-old ascending trend line near $1,925 lures the sellers unless the quote breaks the 21-day SMA level of $1,961.


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