Gold declines by $8 in Asia, focus on narrowing price range
- Gold dips in Asia as equities waver and dollar trades in a sideways manner.
- Macro factors suggest the scope for stronger gains in gold.
- Chart analysts take note of the contracting triangle range on the daily chart.
Gold is flashing red at press time amid mixed action in the equity markets and lackluster US dollar.
The yellow metal is currently trading near $1,700, representing a 0.27% drop on the day, having hit a high of $1,708 earlier today. While the futures on the S&P 500 are up 0.10%, stocks in Australia are down 0.6% and those in China are trading flat. The dollar index, which tracks the value of the greenback, is flatlined near 99.80, having risen by nearly 150 pips in the last two days.
The macro-environment remains anti-risk with investors worried about the increasing tensions between the US and China about the coronavirus outbreak translating into a new trade war. Additionally, investors seem concerned about a potential second wave of COVID-19 as nations seek to re-open their economies and get people back to work.
What's more, American households added $155 billion of debt in the first quarter and overall debt levels rose to a new record at $14.30 trillion, the Federal Reserve Bank of New York said on Tuesday. The situation will likely worsen in the second quarter due to record job losses.
Gold, being a safe haven, stands to gain from these anti-risk developments. So far, however, the yellow metal buyers have remained on sidelines.
Notably, the metal is trapped in a three-week-long narrowing price range, according to the daily chart. A range breakout will likely invite more chart-driven buying leading to a re-test of April highs near $1,750. On the flip side, a range breakdown would indicate a bullish-to-bearish trend change.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
