Gold hovers above $1,800 as dollar drops despite lingering coronavirus concerns

Gold is better bid at press time with prices trading above $1,800 per ounce alongside a weak tone in the US dollar, the yellow metal's biggest nemesis. 

The greenback is trading in the red despite the continued rise in the number of coronavirus cases in the US and other parts of the world. The US alone recorded 59,747 new infections in the last 24 hours, according to Johns Hopkins University. With that, the total number of cases in the US crossed the 3.3 million mark. 

The weakness in the greenback, a preferred safe haven since the beginning of the virus crisis, could be attributed to the uptick in the US stock futures. At press time, the S&P 500 futures are reporting a 0.5% gain, a sign the risk sentiment remains strong and stocks are likely to extend Friday's rally. 

Looking forward, the yellow metal is likely to continue tracking the action in the US dollar. The greenback may find bids, if the US corporate earnings season, due to begin this week, reveals bigger-than-expected economic damage in the second quarter, leading to a pullback in the equity markets. In that case, gold may come under pressure. 

The losses, however, could be short-lived, as dips my be met with increased haven demand. Also, the Federal Reserve is still buying treasuries at a faster pace. As such, the investment demand for gold is likely to remain high. 

Technical levels

The bearish divergence of the MACD histogram and the 14-day relative strength index's downside break of an ascending trendline suggests scope for a pullback. The yellow metal may revisit support at $1,765 (May 18 high) in the short-run. On the higher side, resistance is seen at $1,818 (July 8 high).