The yellow metal gold traded sharply bullish to hold around 1,720 area. Most of the buying in gold was safe haven driven, leading the gold prices towards the highs of 1,726. Below this, the XAU/USD is likely to close a doji candle, which suggests odds of bearish bias retracement in gold.
The risk appetite was still there in the market after the news of potential vaccine and drug for coronavirus. A company named Merck & Co., famous for its work on developing vaccines for Ebola, said on Tuesday that it was working on a drug to cure the infection and two vaccines to prevent it.
This optimism that the world would leave coronavirus behind it and start its routine before the vaccine development added in the pair’s gains. Besides, the statement from the U.S. came in and intensified the US-China anxieties. A day before, the United States Secretary of State, Mike Pompeo, notified the U.S. Congress that the Trump administration no longer consider Hong Kong as autonomous from mainland China which is also hiking safe-haven appeal in gold.
The XAU/USD prices are now holding below 1,724 level which is extending resistance to gold. It’s a downward channel which is keeping the gold underpressure around this level. We can try to capture a quick sell trade in gold in order to secure a correction until 1,713 level. The RSI is also taking a downward turn and may cross below 50 to supported selling bias.
Entry Price – Sell 1721.14
Stop Loss – 1728.14
Take Profit – 1713.14
Risk to Reward – 1.14
Profit & Loss Per Standard Lot = -$700/ +$800
Profit & Loss Per Micro Lot = -$70/ +$80