Today in the Asian trading session, the yellow metal prices failed to stop its previous day losing streak and still flashing red around the $1,936 level, having hit the low of $1,932 level on the day. However, the broad-based U.S. dollar bullish trend could be considered one of the main reasons behind the yellow-metal fresh selling bias. Let me clear that the U.S. dollar recovery rally came in action after the Tuesday released U.S. better-than-expected manufacturing data.
Although, the fresh disappointing U.S. Employment data failed to leave any negative impact on the U.S. dollar. On the other hand, the market risk-on sentiment, backed by the hopes of the COVID-19 vaccine, also weighed on the yellow metal price. Elsewhere, the reason behind the risk-on market sentiment could also be associated with the fresh, positive reports that global central bankers, including the Fed, BOE, RBNZ, and BOJ, decided to ease the monetary policy further if needed. As well as, the coronavirus (COVID-19) numbers from the U.S. and Australia decreasing gradually, which also keeps the market positive.
On the contrary, the looming uncertainty over the U.S. aid package to control the coronavirus (COVID-19) and US-China long-lasting tussle keep challenging the upbeat market tone and capped further downside for the gold. Gold prices are trading at 1,934.55 and consolidating in the range between 1,931.74 - 1,951.13.
It is worth recalling that the yellow-metal prices initially got some support on the back of the negative U.S. private-sector employment data, but the gains were short-lived and temporary, as the U.S. dollar did not give any major attention to the downbeat U.S. data and keep gaining its positive traction, which undermined the yellow-metal prices. At the data front, the Employment in the U.S.' private sector rose by 428,000 in August, the monthly data published by the Automatic Data Processing (ADP) Research Institue revealed on Wednesday. This reading followed July's increase of 212,000 (revised from 167,000) and missed the market expectation of 950,000 by a wide margin.
Despite this, the broad-based U.S. dollar managed to maintain its previous day's gains and still flashed green. However, the modest gains in the U.S. dollar kept the gold prices under pressure as gold's price is negatively correlated to the U.S. dollar price. Whereas, the U.S. Dollar Index that measures the greenback against a bucket of 6-major currencies rose by 0.03% to 92.977.
Also, supporting the market trading sentiment could be the latest optimistic hopes of the coronavirus vaccine. It is worth reporting that the pharmaceutical companies worldwide are stepping towards final tests with one of the top candidates developed by AstraZeneca beginning its trials starting from today. This, in turn, boosted the market trading sentiment and weighed on the safe-haven metal. Moreover, the vaccine hopes were further bolstered by the headlines from the COVAX group that stands for COVID-19 Vaccines Global Access, a joint global struggle to develop, manufacture, and distribute a vaccine to control coronavirus and spread it evenly, as per Australia and New Zealand Banking Group (ANZ).
Apart from the U.S. data, the market trading sentiment was also being supported by the upbeat China and Japan data, which showed an increase in manufacturing yesterday. China's front, the Caixin manufacturing PMI for August increased to 53.1 from 52.8 in July. Likewise, Japan's manufacturing PMI rose to 47.2 in August from 45.2.
On the contrary, the two biggest economies are at loggerheads after the latest headlines concerning additional sanctions on China diplomats by the U.S. Also fueling the tussle could be the reports suggests Beijing's embassy in America criticized harshly by the U.S. However, these gloomy headlines could give some support to the gold prices.
In the absence of the major data/events on the day, the market traders will keep their eyes on Friday's Nonfarm Payrolls (NFP). As well as, the USD moves will also closely followed as the recently downbeat ADP print, 428K versus 950K forecast suggests a further weakening of the employment numbers, which could drag the U.S. dollar.
Daily Support and Resistance
S1 1869.77
S2 1909.33
S3 1925.67
Pivot Point 1948.89
R1 1965.23
R2 1988.45
R3 2028.01
The precious metal gold fell distinctly following breaking the support level of 1,958 mark. This mark may instantly act as resistance, and beneath this, the gold prices can stay bearish until 1,935. A slight retracement can be seen until the 1,955 level. A sideways trading session can be anticipated ere NFP news on Friday, however today, a bullish breakout can lead gold price until 1,979, and a downward violation of support can drive gold prices towards 1,910. Good luck!