- Gold prices stretch the previous day’s pullback moves from $1,726.
- US-China tension confronts hopes of economic restart.
- US dollar index stays depressed near two-week low.
- FOMC minutes, developments on trade war, virus will be in focus.
Gold prices remain modestly positive around $1,749, up 0.24% on a day, amid the early Wednesday. In doing so, the yellow metal stretches the previous day’s recoveries from $1,726 amid mixed catalysts.
While the White House adviser Larry Kudlow’s comments suggesting US President Donald Trump wasn’t seeking to tear trade deal with China initially favored risks, the Senate Republicans push for investigations into virus outbreak and China’s role in it keeps the riks-tone sluggish.
That said, the market’s risk-tone remains sluggish with the US 10-year Treasury yields staying below 0.70%, down 1.5 basis points, whereas stocks in Asia-Pacific flashing mixed signals by the press time.
The US dollar index (DXY) remains on the back foot for the third day, near a two-week low, around 99.48 by the press time.
On Tuesday, the bullion managed to recover Monday’s losses from the multi-year high as the US dollar dropped amid downbeat testimonies by the Fed Chair Jerome Powell and US Treasury Secretary Steve Mnuchin. Also favoring the greenback’s drop was downbeat housing data from the US as well as concerns surrounding the US-China after President Trump warned to permanently freeze US contribution to the World Health Organization (WHO).
It should additionally be noted that the Aussie-China tussle also intensified and offered bids to the precious metal the previous day after China levied 80% tariffs on Australian barley. While increasing the risk aversion was the news from Bloomberg suggesting further hardships for Aussie exports of wine, seafood, oatmeal, fruit and dairy to China.
Moving on, minutes of the recent Fed meeting will be the key for near-term moves of the bullion while trade/virus headlines can keep the driver’s seat.
Technical analysis
While Friday’s top around $1,752 can offer immediate resistance to the bullion during the run-up to refresh the recent high of $1,765.38, its further upside might not hesitate to challenge the year 2012 top near 1,796.
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