Gold struggles to ride on risk aversion wave, stays below $1,700

• Gold prices remain modestly changed despite broad risk-off sentiment.
• The fears of US-China trade tussle, downbeat economics from Japan and coronavirus worries keep markets troubled.
• PMIs can try to decorate the light calendar, trade/virus news should gain high importance.

Despite the recent risk-off sentiment, Gold prices remain more or less unchanged while flashing $1,687 as a quote during the Asian session on Friday. While the US-China trade war and downbeat catalysts from Japan seem to have been the major risk-signals off-late, US dollar pullback is likely behind the yellow metal’s lack of performance.

As if the current coronavirus (COVID-19) crisis isn’t enough for the world, US President Donald Trump offered additional challenges to the market while firing trade-war shots towards China. In return, Chinese state media attacked US Secretary of State Mike Pompeo with words like “enemy of humankind”, “highly venomous”, etc.

On the other hand, Japanese inflation and PMI data amplified fears of a recession in the world’s third-largest economy, the same was also backed by the NIKKEI survey. Further, NHK spread the news that the Japanese PM will extend emergencies in the nation on Monday.

It should also be noted that the US Dollar Index (DXY), a gauge of US dollar against major currencies, registers 0.13% gains, the first in the last six days, by the press time.

Looking at the risk catalysts, US 10-year Treasury yields remain unchanged near 0.62% but stocks in Asia have been flashing red signal even if China is off for Labor Day.

Given the market’s latest attention on trade headlines, coupled with the on-going fears from the COVID-19, a light economic calendar having the first revision of PMIs can only offer intermediate moves unless flashing extreme signals.

Technical analysis

While a three-week-old support line near $1,680 acts as the immediate support, 200-bar SMA level on the four-hour chart, near $1,640 becomes the key. On the upside, one-week-old falling trend line and the monthly resistance line since April 14, respectively near $1,720 and $1,733, challenge the bulls.