Gold: US dollar strength takes a toll on the recovery, moves below $1,700
|- Gold prices fail to cheer risk-off sentiment amid broad US dollar strength.
- Risks remain heavy as US death toll climbs, talks of economic re-start turn softer.
- US President Donald Trump signaled another aid package but failed to extend Friday’s risk-on tone.
Gold prices register mild losses of 0.05% on the day while trading near $1,683 early Monday. Although the recent risk aversion wave seems to flirt with the bullion buyers, the broad US dollar strength exerts a downside pressure on the safe-haven metal.
The fresh rush to safety could be attributed to the surge in the coronavirus (COVID-19) related death figures from the US and the UK. Also supporting the yellow metal could be the People’s Bank of China’s (PBOC) rate cut.
On the other hand, the US dollar takes the fresh bids mainly due to safe-haven allure as well as the Trump administration’s push to re-start the economy in a phased manner. It should also be noted that US President Donald Trump’s indirect attack on China’s efforts to tame the coronavirus outbreak also pushes the risk-off sentiment.
While portraying the trade sentiment, US 10-year Treasury yields drop more than two basis points (bps) to 0.634% whereas Asian stocks also struggle.
Given the early-day hints of additional stimulus from the US and Japan, traders will wait for the actual announcement of near-term direction. Even so, the virus updates will not lose their importance to move the markets.
On the economic calendar, the US Chicago Fed National Activity Index for March, prior 0.16%, is the only release in the line to entertain the economy watchers.
Technical analysis
Unless marking sustained trading beyond 10-day SMA, currently near $1,688, Gold prices may remain under pressure.
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