On Friday, the precious metal gold record-breaking bullish rally paused amid increased demand for the U.S. dollar ahead of the U.S. NFP data.
Gold continues to gain support amid US-China on-going war, the relationship between the world’s two largest economies (US-China) getting sourer further, as America passed the plan to ban the Chinese video app TikTok in the wake of security threats. As per the Trump keywords, “We must take aggressive action against the owners of TikTok to protect our national security”. In return, China’s Foreign Ministry recently threatened that it would firmly opposed to U.S. actions. This intensifying tussle continues to weigh on the market trading sentiment and underpinning the safe-haven assets.
Apart from this, the fears of rising COVID-19 cases in the U.S., Australia, Japan, and some of the notable Asian nations like India continually fueling worries that the economic recovery could be halted underpinned demand for the Japanese yen and capped further upside in the currency pair. However, these fears were further boosted by the Federal Reserve’s recent comments that the second wave of the virus was slowing the economic recovery in the world’s biggest economy.
However, the on-going political impasse over the shape and size of the next U.S. fiscal recovery package also played its role in declining equity markets. It is worth reporting that the American lawmakers failed to provide any details of the much-awaited coronavirus (COVID-19) phase 4 aid package and failed to help unemployed people over the jobless claims. As a result, the U.S. Senate Democratic Leader Chuck Schumer recently cleary said that both parties are still far from reaching any agreement over the much-awaited phase 4 fiscal stimulus. In the meantime, the Senate’s Republican leader, Mitch McConnell, urged policymakers towards attending discussions for the aid bill during the generally observed August vacation.
As in result, the broad-based U.S. dollar succeeded in stopping its early-day losses and took the safe-haven bids on the day amid market risk-off sentiment. However, the gains in the U.S. dollar could be short-lived or temporary due to the fears that the global economic recovery could be halt because of the second wave of coronavirus cases. However, the gains in the U.S. dollar kept the currency higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies recovered to 92.972.
It will be an occupied day for the yellow metal gold as traders anticipate the U.S. labor market figures, particularly, the NFP expected and coming out through the U.S. session. Gold is encountering resistance at the 2073 mark along with support at 2047. It has recently broken the upward trendline support level of 2065, which may work as a resistance for now. But the bearish bias seems to dominate right now. Let’s keep an eye on 2054 as a violation of this may trigger more selling until 2037 and 2018 marks today.
Entry Price – Sell 2059.13
Stop Loss – 2065.13
Take Profit – 2053.13
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$600/ +$600
Profit & Loss Per Micro Lot = -$60/ +$60
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