- Gold comes under some selling pressure on Thursday amid a pickup in the USD demand.
- The pullback seemed unaffected by softer risk tone amid worsening US-China relations.
Gold edged lower through the early European session and was last seen trading near the lower end of its daily trading range, below the $1735 region.
The precious metal struggled to capitalize on this week’s positive move, instead came under some fresh selling pressure on Thursday and for now, seems to have snapped two consecutive days of winning streak. The downtick was sponsored by a goodish pickup in the US dollar demand and seemed rather unaffected by the prevalent cautious mood around the global equity markets.
Minutes of the FOMC meeting held on April 29, released on Wednesday, reflected a grim outlook and hinted at more stimulus measures for economic recovery. The US dollar managed to gain some traction on Thursday in reaction to the Fed’s dovish message, which eventually turned out to be one of the key factors that exerted some downward pressure on the dollar-denominated commodity.
Meanwhile, growing market fears about the second wave of the coronavirus infections and concerns over worsening US-China relations did little to lend any support to the safe-haven precious metal. Tensions between the world’s two largest economies escalated further after the US Senate passed a bill that could lead Chinese companies being barred from listing on the American stock exchanges.
With the USD price dynamics acting as an exclusive driver of the commodity’s move on Thursday, market participants will now look forward to the US macro releases for a fresh impetus. The US economic docket features the release of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and Flash Manufacturing PMI.
It will now be interesting to see if the commodity is able to attract any dip-buying at lower levels or the current pullback confirms the formation of a near-term top. The latter will set the stage for an extension of the corrective slide from multi-year tops set on the first day of the week.
Technical levels to watch
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