During Wednesday’s Asian trading session, the yellow metal prices extended its overnight buying bias and gathered some pace around the two-week tops above 1,960. The massive offered tone surrounding the greenback was seen as one of the major factors that helped the dollar-denominated commodity gold. However, the weaker tone around the U.S. dollar was mainly driven by the ongoing risk-on mood, which eventually undermined the safe-haven U.S. dollar. Besides, the U.S. dollar bearish bias could also be associated with traders’ cautious mood ahead of the Federal Open Market Committee (FOMC) meeting. Apart from this, the market trading sentiment was being supported by the news suggesting the AstraZeneca’s restart of the coronavirus (COVID-19) vaccine trials.
Meanwhile, the risk-on sentiment was further bolstered by the University Of Pittsburgh School Of Medicine’s positive news, where experts produced the strongest antibody component for the coronavirus tested over animals. These positive headlines became the key factor that kept the lid on any further yellow metal gains. On the contrary, the Sino-US trade area and coronavirus woes flashed mixed signals, which keep challenging the market risk-on sentiment. Gold prices are currently trading at 1,966 and consolidating in the range between 1,949.99 – 1,962.97. Moving on, the market traders seem reluctant to place any strong position ahead of the U.S. Federal Reserve’s policy meeting, which is due to happen on the day.
Despite the COVID-19’s ongoing global spread and the Sino-American tussle, not to forget the fears of no-deal Brexit, the market trading sentiment extended its early-day positive tone and remained supportive by the positive data from the U.S. and China, which suggesting gradual recoveries in the global economics from China and the U.S. At the data front, China’s Industrial Production and Retail Sales surpassed forecasts for August, the U.S. NY Empire State Manufacturing Index also recovered to 17.00 and pleased the optimists.
Apart from this, the reasons for the risk-on market trading sentiment could also be attributed to the positive headlines concerning the coronavirus vaccine. The AstraZeneca showed readiness for resuming its vaccine trials after a brief “routine” pause, while the Pfizer is confident about getting the cure of the pandemic by the year’s end. Furthermore, the latest news came from the University Of Pittsburgh School Of Medicine, wherein the scientists produced the strongest antibody component for the pandemic. This, in turn, underpinned the market trading sentiment and kept the lid on any further gains in the gold prices.
Across the pond, the tussle between the US-China flashed mixed signals as the Trump administration quietly eased warning towards China and Hong Kong. Whereas, the Dragon Nation extended tariff relief for U.S. imports. This, in turn, the U.S. rolled back the decision to ban some of the productions from Xinjiang. Despite this, the relationship between US-China turned sour after the World Trade Organization (WTO) ruled against the Trump administration’s decision to levy multiple trade sanctions on China. These mixed headlines might exert downside pressure on the market trading sentiment, which could help further the safe-haven assets.
The broad-based U.S. dollar failed to keep its overnight gains and edged lower on the day, mainly due to the risk-on market sentiment. Moreover, the U.S. dollar losses could also be associated with cautious sentiment ahead of the U.S. Federal Reserve’s policy meeting, which is scheduled to take place on the day. It is worth mentioning that the Fed will speak later to hand down its policy decision; as we know, this will be its first meeting since Fed Chairman Jerome Powell announced a more relaxed approach to inflation at the Jackson Hole symposium August 27. However, this stance is broadly expected to be continued and could undermine the U.S. dollar by introducing further stimulus measures. At the coronavirus front, the ongoing rise in COVID-19 cases globally continues to fuel worries concerning the global economic outlook for the foreseeable future.
Looking ahead, the market traders will keep their eyes on Japan’s trade numbers and Aussie housing data. Whereas, investors are also looking to the U.S. Federal Reserve’s policy meeting, scheduled to take place on the day. Meanwhile, New Zealand’s Current Account and the Pre-Election Economic and Fiscal Update (PREFU) will also key to watch. All in all, the updates surrounding the Brexit, virus, and US-China tussle will not lose their importance.
The yellow metal gold traded sharply bullish amid weaker U.S. dollar to trade at 1,961 level. On the higher side, the gold prices may continue to trade bullish until 1,970 and 1,985 and 1,994 resistance levels. On the lower side, the gold may gain support at 1,963 and 1,955 levels. Overall, the trading bias seems bullish. Good luck!