Gold rises after three-day losing streak as dollar weakens
- Gold picks up a bid as the dollar loses ground against majors.
- The US stock futures rise, weakening the haven demand for the greenback.
- The recent stock market rally lacks substance, according to Goldman Sachs.
Gold is flashing green at press time with the greenback, yellow metal's biggest nemesis, feeling the pull of gravity amid signs of risk-on in the global equities.
The yellow metal is currently trading $1,711, representing a 0.16% gain on the day, having risen from $1,703 to $1,713 in the 60 minutes to 02:00 GMT. Prices fell by 0.12%, 0.96%, and 0.15% on Friday, Monday, and Tuesday, respectively - the metal's first three-day losing streak since mid-March.
Broad-based dollar weakness
The greenback is being sold across the board during Wednesday's Asian trading hours, as evidenced from the 0.30% decline in the dollar index, which measures the value of the greenback against major currencies.
Notably, the Japanese yen is trading at a six-week high of 106.54 against the dollar, and the growth-linked currencies, AUD and NZD, are reporting at least 0.40% daily gains.
The dollar weakness could be associated with the improved risk appetite in the financial markets, as suggested by the 1% gain in the futures tied to the S&P 500 index. An absence of fresh bad news is likely boding well for the risk assets and hurting the safe-haven dollar.
The risk assets, however, are operating on a shaky ground, as the breadth of the recent rally in the S&P 500 is quite narrow, according to Goldman Sachs analysts. If the stocks turn risk-averse, the dollar will likely find haven bids. However, gold, too, is expected to gain a bigger ground over the long run on account of the unprecedented monetary and fiscal lifelines launched by authorities across the globe.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
