- Gold failed to capitalize on the early uptick despite a fresh leg down in equity markets.
- The benchmark 10-year US bond yields jump to 1.2% and exerted some fresh pressure.
- The global rush to hoard cash benefitted the USD and contributed to the selling bias.
Gold extended its sharp intraday slide and weakened farther below the key $1500 psychological mark through the early European session.
The precious metal failed to capitalize on the overnight goodish intraday bounce and an early uptick to the $1546 region. Traders seemed rather unimpressed by a fresh leg down in the global equity markets, which tends to undermine the commodity's perceived safe-haven status.
A strong follow-through rally in the US Treasury bond yields turned out to be one of the key factors that exerted some fresh downward pressure on the non-yielding yellow metal. In fact, the yield on the benchmark 10-year US government bond jumped back to 1.2% on Wednesday.
This coupled with a sudden pickup in the US dollar demand added to the intraday selling bias surrounding the dollar-denominated commodity. The greenback benefitted from its status as the global reserve currency and a rush to hoard cash to ride through the coronavirus crisis.
However, growing concerns over the economic fallout from the coronavirus pandemic – despite the recent efforts from major central banks and various government measures to offset recession fears – might lend some support to the commodity.
Hence, it will be prudent to wait for some strong follow-through selling, possibly below the recent swing lows to over one-month lows, around the $1450 region, before positioning for any further near-term depreciating move for the metal.
Technical levels to watch
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