- Gold seesaws between $1,710 and $1,705 following its heaviest run-up in three weeks.
- US President Joe Biden’s $2.25 trillion infrastructure spending couldn’t please markets amid fears of deadlock.
- Mixed vaccine news, virus woes and West versus China story battle US economic recovery hopes.
- China’s Caixin Manufacturing PMI will be important in Asia but risk news is the key to follow.
Despite cooling down from $1,715, gold treads water inside a $5 trading range, around $1,707 by the press time of the early Asian session on Thursday. The yellow metal marked a stellar recovery from $1,678 but a lack of enthusiasm in the market, despite a $2.25 trillion US infrastructure spending announcement, probes the bullion buyers. Also challenging the precious metal prices are the coronavirus (COVID-19) and vaccine updates, not to forget news linked to China.
Sober reaction to Biden’s bold move…
Despite US President Biden’s courageous moves to propel the world’s largest economy, recently by an eight-year spending plan, global investors aren’t lured. The reason could be traced from details of the $2.25 trillion bill suggesting tax hikes for corporate and relief for the middle-income group, which may push Republicans to block the progress in the Senate.
Also challenging the commodity optimists could be the vaccine update from Johnson and Johnson suggesting a delay in deliveries due to a mix-up in the factory. Though, Pfizer’s 100% vaccine efficacy for Children keeps the traders hopeful.
Virus conditions are worsening again as Brazil detected a new covid variant and Australian lockdown looms. Further, the Western pressure on China escalates, led by the US and the UK. Recently, US Trade Representative’s (USTR) office vowed to keep battling 'significant' foreign trade barriers while also alleging Beijing of flooding the global markets and raising bars for entry.
On the positive side, upbeat data from the US and China, not to forget the UK’s GDP, battles the risk-off mood.
Against this backdrop, Wall Street closed mixed while S&P 500 Futures print 0.52% gains by the press time. Further, the US 10-year Treasury yield remains strong near multi-month high but the US dollar eases off-late.
Moving on, US ISM Manufacturing PMI and Nonfarm Payrolls (NFP) will be the key data to watch for near-term direction. Given the market rush for the US dollar and strong Treasury yields, the yellow metal may fade the recovery soon. Though, risk catalysts will be important to watch.
Technical analysis
Unless crossing a two-month-old falling trend line, around $1,723 by the press time, gold prices remain vulnerable to visit $1,670 key support.
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