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  • Gold prices keep the recent trading range between $1,924 and $1,933.
  • Sino-America, India-China tension escalates, Brexit woes are also on the front foot.
  • US Labor Day Holiday limits market moves, European equities gain amid hopes of ECB’s dovish action.
  • No major data on the economic calendar but risk catalysts will be the key.

Gold prices pick-up the bids near $1,931 ahead of Tuesday’s Tokyo open. Even so, the yellow metal remains in the immediate $1,924-33 trading range. The US market’s off on Monday restricts the global trading sentiment despite multiple challenges to risks and the US dollar’s upbeat performance. Also contributing to the dull trading could be a light economic calendar elsewhere.

Risk challenges probe sellers trying to firm the grip…

The yellow metal marked the heaviest weekly losses in the previous four by the end of last Friday as the US dollar index (DXY) recovered from the 28-month low. On Monday, the greenback gauge flashed a five-day winning streak even as markets in the US cheered the extended weekend.

The reason could be spotted from the global rush towards the USD amid expectations of further easing from the European Central Bank (ECB), the shift in the global relations with China and recently positive US economics.

Having witnessed dismal German Industrial Production (IP) data, following the downbeat inflation and GDP figures for the bloc, the ECB is considered to speak dovish during this week’s monetary policy meeting. Although the central bank isn’t expected to announce any monetary policy change, President Christine Lagarde needs to safeguard her reputation amid the coronavirus (COVID-19) times when central bankers, like Fed, keep pumping the money supply.

Moving on, the US-China tussle gets tough after news suggesting the Trump administration’s likely blacklisting of Beijing backed Semiconductor Manufacturing International Corporation (SMIC). Further, the Chinese Foreign Ministry’s verbal retaliation to the American State Department spokesperson alleging for visa restrictions on the US reporters working China also fan the tension among the world’s top two economies. It should additionally be noted that the dragon nation’s border tussle with India is escalating with CGTN recently saying that China’s military is demanding India censure its soldiers whom China says illegally crossed the Line of Actual Control (LAC) on Monday and fired warning shots on Chinese border patrol soldiers.

Furthermore, Brexit pessimism and increasing COVID-19 cases in India are also among the catalysts that favor the market’s rush for the risk-safety.

Though, the global risk barometers are witnessing reset mode ahead of the US traders’ return. While portraying the same, the S&P 500 Futures rise 0.22% to 3,440 by the press time.

Looking forward, traders will keep eyes on the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, for immediate direction.

Technical analysis

FXStreet’s Ross J. Burland identifies bearish tendencies on the four-hour (4HR) timeframe while saying,

Bears will need to be patent to ensure that there are high probabilities that the price will extend to the downside below the structure.  The following is a top-down analysis that illustrates where a potential short trade for a 1:3 risk to reward opportunity might emerge from. 

Read: Gold Price Analysis: XAU/USD bears waiting patiently for 1:3 R/R


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