The yellow metal prices failed to extend its bullish overnight rally and instantly dropped below the $1,940 level after hitting 9-day high overnight. However, the overnight gains could be attributed to the report suggesting the second week of U.S. stock selloff and fall in the U.S. dollar. Still, the gains in the precious metals were short-lived as the market trading sentiment turned positive.
Thus, the market trading sentiment was supported by optimism over a possible vaccine and treatment for the highly infectious coronavirus, as well as Tokyo’s optimism over easing lockdown restriction also favor the market trading sentiment, which ultimately undermined the safe-haven metal.
On the contrary, the coronavirus (COVID-19) woes and the US-China tussle keep challenging the market risk-on mood, which capped further downside momentum for the bullion. Elsewhere, the broad-based U.S. dollar weakness could help the bullion prices to limit its deeper losses. The yellow metal is trading at 1,941.80 and consolidating in the range between 1,937.41 – 1,949.35.
It is worth recalling that the market trading sentiment is rather unaffected by the on-going uncertainties over the much-awaited fiscal package, fueling worries over the U.S. economic recovery. Moreover, the market players are also ignoring President Donald Trump’s hard stand against TikTok and the recent cancellation of over 1,000 visas from Beijing. Besides, the fears of a no-Brexit deal also failed to hurt the market trading sentiment. As in result, the futures tied to the S&P 500 are adding 0.57%.
However, the market trading tone was being supported by optimism over a possible vaccine and treatment for the coronavirus. After the Goldman Sachs, these hopes fueled that Pfizer’s candidate said that Pfizer’s candidate vaccine could be approved as early as October. In the meantime, the news of receding tensions between India and China and the positive news over the receding coronavirus (COVID-19) led activity restrictions in Tokyo also boosted the market trading sentiment. This in, turn, undermined the safe-haven metal.
Moreover, the latest record recovery in the BSI Large Manufacturing Conditions Index for the third quarter (Q3), from -44.2 expected and -52.3 before +0.1, citing that the Japanese economy is set for a strong recovery, also favor the market risk tone and kept the yellow-metal prices under pressure.
As in result, the broad-based U.S. dollar failed to gain any positive traction and took the offer on the day as doubts persist over the global economic recovery from the U.S. stock selloff witnessed that selloff. As well as the risk-on market sentiment also weighed on the American currency. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.10% to 93.295 by 9:40 PM ET (2:40 AM GMT).
At the coronavirus front, the global COVID-19 cases continue to increase, which fade hopes of a faster economic recovery. As per the latest statement, there are around 28 million COVID-19 cases globally as of September 11, according to Johns Hopkins University data. These fears might urge traders to invest in the safe-haven asset like gold.
Looking ahead, the market traders will keep their eyes on the U.S. Consumer Price Index (CPI) for August, which is expected 1.2% against 1.0% YoY. Moreover, the updates surrounding the Sino-US tussle and Brexit-related headline could not lose their importance.
The precious metal gold has disrupted the triple bottom support level of 1,942 level and it continues to trade below this level. Gold may find an immediate support at 1,937 level and bearish breakout of this level can extend selling bias until 1,921. Conversely, the bullish crossover of 1,942 level may drive buying trend until 1,950 level and above this, the immediate target is expected to be 1,965 level. Let’s brace for the U.S. Inflation data to encourage further trend in gold. Good luck!