Gold Price Analysis: XAU/USD slips below $1,960 as US dollar pullback snaps nine-day winning streak

Gold prices decline to $1,957.12, down 0.65% on a day, during the pre-European session on Thursday. The bullion prints its first daily loss so far in nine days as the US dollar pulls back from the lowest since June 2018. While there are few positives for the greenback, retracement after the Federal Reserve-led losses and increasing hopes of aid package could be cited as second-tier triggers. On the contrary, surging coronavirus (COVID-19) woes in the US and cautious mood ahead of the second quarter (Q2) American GDP should ideally push markets for the risk-safety.

The US dollar index (DXY) marks 0.21% gains while rising to 93.46 by the press time. The greenback’s gauge versus the major currencies slipped to the multi-week low of 93.17 the previous day after Fed matched market consensus with its dovish messages.

While identifying the grave situations, US Senate leader Mitch McConnell triggered hopes of the decision on the unemployment claim benefits, which are to expire on Friday, before the week ends. The Republican diplomat also opens the door for a bit smaller relief package than the initial $1.0 trillion proposal earlier this week. 

Talking about the virus, the US marked the highest daily death toll of 1200+ plus, taking the total to 665K, on Wednesday. The pandemic is also getting strong in China, Tokyo and Australia whereas the UK policymakers have rung alarms of wave 2.0. It’s worth mentioning that the global counts of the new cases cross 14.5 million with the US contributing over 4.00 million to occupy the unfortunate place of a topper.

Other than the USD moves, news from the World Gold Council (WGC) also negatively affects the bullion prices. The update conveys that one of the key gold customers, India, registered 56% slump in demand during the first six months and further price increase could further push the buying southwards.

Looking forward, traders will closely watch the US GDP figures as the first reading is expected to slump by 34.1% versus -5.0% previous readouts. If the actual outcome manages to offer positive surprise the USD will have an additional reason to extend the pullback.

Read: US Second Quarter GDP Preview: Are there any shocks left?

Technical analysis

Unless providing a daily closing beyond $1,980, gold bulls are less likely to aim for $2,000, which in turn highlights the previous record high near $1,921 as immediate key support.