- Gold continued scaling higher on Wednesday amid sustained selling around the greenback.
- Bulls shrugged off the upbeat mood across the global equity markets, overbought conditions.
- Investors now eye the release of the US ADP report and ISM PMI for some trading impetus.
Gold maintained its strong bid tone through the mid-European session and was last seen hovering near record highs, around the $2040 region.
The precious metal prolonged its recent strong bullish momentum and built on the previous day’s impressive rally beyond the key $2000 psychological mark. The prevalent bearish sentiment surrounding the US dollar was seen as one of the key factors benefitting the dollar-denominated commodity.
As investors looked past Monday’s upbeat US ISM Manufacturing PMI, the greenback resumed its recent bearish trajectory and moved well within the striking distance of two-year lows. The lack of progress on the next round of the US fiscal stimulus package further undermined the already weaker USD.
The greenback was further pressured by growing market worries that the ever-increasing coronavirus cases could undermine the US economic recovery. Adding to this, escalating tensions between the world’s two largest economies created enough uncertainty for gold prices to continue scaling higher.
Wednesday’s strong follow-through traction could further be attributed to some technical buying above the $2000 mark. Even the upbeat market mood – as depicted by strong gains across the global equity markets and which tends to weigh on the safe-haven commodity – failed to hinder the strong momentum.
Meanwhile, extremely overbought conditions on short-term charts might turn out to be the only factor capping the upside. However, the fact that the commodity is yet to show any signs of possible bullish exhaustion, the stage seems set for a further near-term appreciating move.
Moving ahead, market participants now look forward to a duo of important US macro data for some meaningful trading opportunities. Wednesday’s US economic docket highlights the release of the ADP report on private-sector employment and ISM Non-Manufacturing PMI for the month of July.