Gold: Under pressure around 8-week low as Dollar Index nears multi-month high
|- Gold prices fail to respect political pessimism surrounding the US and the UK amid stronger USD.
- Receding geopolitical worries from the Middle East add downside pressure.
With the US Dollar (USD) strength outshining political pessimism surrounding the US and the UK, Gold prices keep it low nearing $1,470 during early Tuesday.
The greenback has been benefiting from the safe-haven flows off-late while the Federal Reserve officials’ refrain from any downbeat comments makes the US central bank most hawkish among the global doves.
Adding to the yellow metal’s weakness could be the lack of optimism surrounding India and China, two of the world’s biggest bullion consumers whereas receding geopolitical tensions concerning the Middle East might also have strengthened bears.
Further to note is that the US Dollar Index (DXY) is close to the highest since May 2017 registered on Monday. The greenback gauge generally has a negative correlation with the safe-haven assets like the Gold and the Japanese Yen (JPY).
On the contrary, the US President is under fresh fires to avail Australian help for Robert Mueller’s investigation while the Republican leader is already witnessing a tough time denying charges to interfere in Ukrainian politics. Elsewhere, the UK Prime Minister Boris Johnson is another leader facing a hard time as a case against the misconduct of behavior adds to previous allegations of mishandling public funds when he was the London Mayor.
Chinese markets are off for a week starting from today and hence trade-war headlines, which have been upbeat recently, could be fewer. As a result, key activity numbers from the Eurozone, the US, and the UK will be closely followed.
Technical Analysis
Sustained trading below mid-August low, surrounding $1,480, directs the quote to July 19 high nearing $1,452 before highlighting 100-day exponential moving average (EMA) level of $1,441. It should also be noted that pair’s recovery beyond $1,480 will have to cross multiple resistances around $1,485 to confront 21-day EMA level close to $1,500 round-figure.
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