- Gold prices extend pullback from $1,739.95, the highest since June 02.
- Risk-off sentiment, US-China tussle might have favored the greenback off-late.
- US Federal Reserve marked a dovish appearance on Wednesday.
- Second-tier US data, qualitative catalysts can offer immediate direction to the commodity traders.
Gold prices drop to $1,732, down 0.35% on a day, during the early Thursday’s trading. The bullion prices earlier surged to the highest in over a week but fails to keep the gains amid the latest U-turn of the US dollar from the multi-day low. The greenback seems to benefit from the fresh US-China tussle as well as broad risk aversion wave while bouncing off the three-month low. On the other hand, the bullion prices might have availed the excuse of inverse relationship with the USD to mark the latest losses.
The US dollar index (DXY) dropped to the lowest since March 10 after the US central bank struck a dovish tone the previous day. The US Federal Open Market Committee (FOMC) kept the benchmark rate unchanged but revised down the GDP and inflation forecasts. The Fed policymakers also anticipate no rate change till 2022 while Chairman Jerome Powell showed readiness to act in the future, if needed.
Following the event, US Presentiment Donald Trump surprisingly praised the Federal Reserve. However, China’s Global Times took a git at it, which in turn might have pushed US Vice President Mike Pence to reiterate their tough stand against Beijing as far as the trade deal is concerned.
Other than the Sino-American tussle, fears of the coronavirus (COVID-19) second wave and market’s optimism surrounding the upcoming US data might have triggered the greenback’s U-turn from the multi-month low.
Having already digested the week’s key event, gold traders are less likely to witness any major moves amid a light calendar. However, the US-China stories and today’s US Jobless Claims, followed by Friday’s Michigan Consumer Sentiment Index, could entertain the markets.
Technical analysis
The precious metal carries the upside break of a short-term resistance line, now support. Additionally, the MACD histogram is also flirting with the bulls and favors the further upside beyond $1,700.
Read: Gold Price Analysis: XAU/USD fades upside momentum near multi-day top above $1,700
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