- Gold prices grind lower following the previous day’s pullback.
- US dollar strength dims the bullion’s risk-safe allure, coronavirus is the key.
- US data, virus updates on the traders’ watch-list.
With the King Dollar cheering the market’s risk-off moves, Gold traders seem to remain depressed. The yellow metal drops to $1,714.80, down 0.08% on a day, during the pre-Europe session on Thursday.
While the International Monetary Fund’s (IMF) warning of a global recession, coupled with the surge in the coronavirus (COVID-19) fatalities, propelled the US dollar the previous day, recently released virus data adds to the broad risk-off.
As per Reuters, the US registers the single-day record increase in the virus death toll by 2,371 to 30,817.
Also supporting the risk aversion could be the IMF’s comments that Asia’s economic growth this year will grind to a halt for the first time in 60 years (mainly due to the deadly virus).
That said, the risk catalysts, namely stocks in Asia and the US futures, remain on the back foot while the US 10-year Treasury yields seesaw around 0.65% by the press time.
Although virus updates can keep the USD in demand, which in turn could negatively affect Gold prices due to the inverse relations between the two, today’s US Jobless Claims will be the key. The weekly employment indicator has recently surged to the worrisome levels and hence anymore upside beyond the previous 6606K, expected 5100K, could escalate the risk aversion. Though, it might not play well for the greenback and can help Gold to recover the latest losses.
Technical analysis
FXStreet’s Omkar Godbole holds a bullish view for gold prices while saying:
From a technical standpoint, the overall trend remains bullish with metal holding above the former resistance-turned-support of $1,703 (former seven-year high reached in March). The hourly chart shows that gold is now consolidating in a narrowing price range, having exited the falling channel during the overnight trade. A range breakout would confirm an end of the price pullback and open the doors to a re-test of $1,750.
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