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  • Gold bulls are taking a breather, having pushed prices to nine-year highs on Wednesday. 
  • Weekly gain looks likely on coronavirus concerns and US-China tensions.
  • A key technical indicator is reporting overbought conditions for first since February. 

Gold is lacking a clear directional bias on Thursday with prices stuck in a trading range of $1,804 to $1,811

The bulls seem to be taking a breather, having engineered a rally from $1,756 to $1,818, a nine-year high, in the last three trading days. 

However, despite the overnight pullback from multi-year highs and the dull trading seen over the past few hours, gold is still up close to 2% on a week-to-date basis. If the metal holds above Monday’s opening price of $1,784 through Friday’s GMT close, a fourth straight weekly gain would be confirmed. That would be the longest weekly winning streak since December 2019. 

The odds look stacked in favor of gold printing its fourth consecutive weekly gain as number of coronavirus cases in the US, the world’s biggest economy, are rising. Additional pessimism may stem from the record US budget deficit and its tensions with China. The US Secretary of State Mike Pompeo on Tuesday announced visa restrictions on some Chinese officials under the Reciprocal Access to Tibet Act, 2018. 

Further, continued deflation in China’s factory-gate prices, as shown by the producer price index released early Thursday, could keep risk appetite under pressure. As such, the yellow metal is likely to remain better bid while heading into the weekend. 

Indeed, the metal’s 14-day relative strength index has crossed above 70  for the first time since February. That overbought reading, however, would gain credence if and when signs of buyer exhaustion emerge on the daily chart. At press time, the daily candles show the bulls are in control. 

Technical levels