The yellow metal prices extended its previous week's losses and dropped from Friday's low near $1,940 to a fresh low of $1,930. However, the broad-based U.S. dollar strength from the multi-month low could be considered as one of the main reasons behind the yellow-metal latest weakness. Simultaneously, the sentiment around the U.S. dollar was improved moderately after the supportive data on business activity and home sales.
On the other hand, the market risk-on sentiment, backed by the hopes of COVID-19 treatment, also weighed on the gold price. Elsewhere, the reason behind the upbeat market sentiment could also be associated with the reports that suggested the coronavirus (COVID-19) numbers from the U.S. and Australia were decreasing. On the contrary, the lingering uncertainty over the next round of the U.S. fiscal stimulus measures and US-China long-lasting tussle kept the market risk-on sentiment under pressure and is considered the major factor capped further downside for the bullion. At the press time, gold is trading at 1,932.12 and consolidating in the range between 1,930.22 and 1,941.58.
Moving on, the traders seem cautious to place any strong position ahead of the U.S. Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium, which is scheduled to happen on Thursday.
It is worth recalling that the gold was declined on Friday amid the stronger U.S. dollar after positive U.S. data. At the data front, the data included the 5.86 million reading for July's existing-home sales, and both the manufacturing and service sectors purchasing managers' index (PMI), which remained above the 50-mark showed expansion and beat forecasts.
However, the equity market flashed green and was supported by the reports that raised the hopes for a new COVID-19 treatment on Sunday. It should be noted that the U.S. Food and Drugs Administration (FDA) announced that it had given "emergency use approval" for a new possible treatment that will use blood plasma as an antibody from recovered patients to treat COVID-19 patients.
Apart from this, the market trading sentiment was further bolstered by the receding coronavirus (COVID-19) numbers from the U.S. and Australia. As in result, the upbeat Market trading sentiment urged the investors to retreat from the safe-haven asset.
On the negative side, the long-lasting tussle between the two biggest economies remained on the slippery track as U.S. President Donald Trump US President Trump didn't hesitate to give statements against China. Reports suggested the possibility of decoupling the U.S. economy from China. On the flip side, the strong bounce-back of the virus in Germany, France, and Spain also kept the traders cautious.
Across the pond, the lingering uncertainty over the next round of the U.S. fiscal stimulus measures also supported the risk aversion. As we know, the U.S. policymakers still have not confirmed the restart of negotiation related to the COVID-19 aid package. However, the package's hurdles were intensified further after the House Speaker Nancy Pelosi took a U-turn from her previous readiness to cut the demands in half.
Despite the upbeat trading sentiment, the broad-based U.S. dollar extended its previous bullish trend and gained on the day amid supportive data on business activity and home sales, but there are still desires that additional monetary easing will be necessary to keep economic growth on track. However, the modest gains in the U.S. dollar kept the gold prices under pressure as the price of gold is inversely related to the price of the U.S. dollar. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies was flat near 93.227.
In the absence of the significant data/events on the day, the market traders will keep their eyes on the U.S. Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium, scheduled to open on Thursday. The USD moves and coronavirus headlines will also carefully follow as they could play a key role in the gold run-up.
Daily Support and Resistance
S1 1853.84
S2 1894.21
S3 1917.25
Pivot Point 1934.57
R1 1957.62
R2 1974.94
R3 2015.3
On Monday, the yellow metal gold is consolidating at 1,933 mark and extends to trade sloping with on symmetric triangle pattern that grants support at $1,924 along with resistance at $1,947. The formation of candles beneath 1,924 levels can encourage selling preference in the market unto 1,911 and 1,888 mark. At the same time, bullish violation of 1,942 level can extend the buying trend until 1,953 mark. Good luck!