Gold Price Analysis: XAU/USD looks for a firm direction above 50-day SMA

Gold prices remain directionless around $1,727 while heading into the European session on Thursday. The yellow metal recently bounced off intraday low on fresh US-China tension but remains near the previous day’s close.

Other than the US-China updates, which suggest a continuation of a difference among the world’s top two economies, fears of the second wave of coronavirus (COVID-19) also weigh on the market’s risk-tone. The latest figures from the US suggest a jump in Texas virus cases while the hospitalization rate shot up in Florida and Oklahoma on Wednesday. Even so, the receding numbers of cases from China and US President Donald Trump’s hint of a cure to the deadly disease seem to counter the risk-off mood.

It should also be noted the India-China tussle and the Asian Developments Bank’s (ADB) downward revision to the growth forecasts for 2020 also weigh on the market’s trading sentiment. Though, a surprise rate cut by the People’s Bank of China (PBOC) should have tamed the pessimism but mostly gone unnoticed.

Amid all these catalysts, the US 10-year Treasury yields remain downbeat around 0.70%, whereas Asian stocks print mild losses by the press time. The US dollar index (DXY), a gauge of the greenback against major currencies that has an inverse correlation with Gold, drops 0.08% to 96.99 as we write.

Considering the market’s recent mixed reaction to the qualitative catalysts, the range-bound trading of gold prices are likely to continue amid a light calendar.

Technical analysis

Although the bullion’s repeated bounces off a 50-day SMA level of $1,715.80 keeps buyers hopeful, the monthly high near $1,745 acts as the tough upside barrier for traders to watch.