- Gold remains bid after posting the heaviest gains since November 05 the previous day.
- Fears of virus strains’ resurgence, cautious sentiment ahead of Georgia runoff favor risk-off mood.
- US-China tussle and dovish Fed also challenge the market sentiment.
- Virus updates, US election news will be the key drivers amid a light calendar.
Gold buyers flirt with $1,945, the highest in eight weeks, during Tuesday’s Asian trading. The quote recently refreshed multi-day high while extending the previous day’s heavy run-up, the most since early November, as the coronavirus (COVID-19) fears gain momentum. Also backing the risk-off mood could be the cautious sentiment ahead of the Georgia election and the Sino-American tussle, not to forget an absence of major data/events.
Bulls cheer virus fears…
Concerns that the covid variants have a faster pace of infection and are resilient to the vaccines make policymakers in the UK, Japan and Europe worried amid a fresh surge in virus strain. To tame the pandemic, respective governments have already announced lockdown measures while eyeing vaccine moves. The latest update suggests Northern Ireland’s support to British activity restrictions and chatters over Japan’s likely ban for all foreign visitors.
It should be noted that the Georgian election is also the key event as it will decide who will hold the US Senate. While the Republicans are more likely to keep their power, the recent surprise victory of the Democrats keep traders guessing ahead of the event. As a result, cautious sentiment weighs on the risks. Furthermore, the US-Iran geopolitical tension renews and signals are stronger for further delisting of Chinese companies from the New York Stock Exchange (NYSE).
Against this backdrop, S&P 500 Futures drops 0.15% after Wall Street benchmarks closed with over 1.0% losses each during Monday. Also portraying the market mood is the US dollar’s bounce off the lowest since April 2018 and the US real yield’s plunge to a record low.
Given the lack of major data and dominance of risk catalysts over price moves, gold buyers will cheer for any further deterioration in virus conditions and/or activity restriction announcements. However, positives from Georgia and Fed policymakers’ signal to stay ready for further easing can test the upside momentum.
Technical analysis
Having successfully cleared a downward sloping trend line from August 07, at $1,899 now, gold is up for challenging November tops near $1,965.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD rises to two-day high ahead of Australian CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD holds above 1.0700 on weaker US Dollar, upbeat Eurozone PMI
EUR/USD holds above the 1.0700 psychological barrier during the early Asian session on Wednesday. The weaker-than-expected US PMI data for April drags the Greenback lower and creates a tailwind for the pair.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.