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Gold Sideways Movement Continues - Risk-Off Market Sentiment In Play


During the Monday's Asian trading session, the safe-haven-metal prices failed to manage its early-day sharp gains from a record high around $1,988.02 and dropped modestly to $1,969 due to the broad-based U.S. dollar fresh bids in the wake of safe-haven demand. However, the gold prices took round near the record high level.

Although, the reason behind the gold early-day sharp gains could be associated with the risk-off market sentiment triggered by the geopolitical tension between the U.S. and China. As well as the lack of clarity surrounding the much-awaited U.S. fiscal package also favored the safe-haven gold. Elsewhere, the bullish bias in yellow-metal prices was further bolstered by the Coronavirus (COVID-19) woes, greatly favoring the market's rush to risk-safety. Moving on, the gains in the greenback could be short-lived or temporary as the Coronavirus continuously picking up pace in the U.S., which faded the hopes for quick U.S. economic recovery.

The safe-haven-metal prices are currently trading at 1,974.19 and consolidating in the range between 1,969.96 and 1,985.11. Since Monday morning, the gold buyers have many items to cheer in the day ahead. Be it coronavirus woes or the further hardships for the Sino-American trade deal; both factors fueled the market risk-off sentiment.

On the other hand, the continuous failure over the much-awaited U.S. fiscal package even after the tough talks during the weekend kept investors worried, which lowered their risk appetite and pushed them towards the safe-haven yellow metal. The fresh signals of further easy money from major global economies also exerted some bullish impact on the safe-haven gold.

At the US-China front, the trade deal between the United States and China seem to be in danger as the Dragon Nation will require massive buying of U.S. farm to meet the import target, which has raised the fears of further hardships for the Sino-American trade deal. The possibilities of reaching the U.S. target will be clear in the next few months as Soybeans typically account for nearly half of China's U.S. farm imports, and the large amount of buying happens in the last 3-months of the year when supplies from top grower Brazil dries up.

Apart from this, the Global Times (G.T.) editor Hu Xijin criticized the U.S. performance in controlling the Coronavirus (COVID-19). As per his keyword, "Coronavirus will give a medal to the American government to firmly stand with the virus, helping it kill as many American people as possible. Whereas, most of the U.S. senior officials will be safe because the virus needs them". This added further burden on the risk-off market sentiment and contributed to the gold price gains.

On the other hand, the red market sentiment could also be attributed to the failure concerning fiscal package and the surge in the Coronavirus (COVID-19) worries. Notably, the United States policymakers failed once again to agree over the much-awaited fiscal package despite difficult talks during the weekend as the Democrats and Republicans still have differences over the package's size. The Democrats showed a willingness to offer $3.5 trillion help, while Republicans do not support anything more than $1.0 trillion. As well as, the U.S. Senate members failed to give any details on the unemployment claims benefit were expired on Friday.

At the coronavirus front, the pandemic numbers from the U.S., Australia India, and Brazil continued to exert downside pressure on the risk sentiment. As per the latest report, Australia's Victoria has recently been given the "state of disaster" title after cases rose from 670. On the other hand, Tokyo reported 292 new coronavirus infections on Sunday, after cases increased by more than 400 in the past two days.

As in result, the S&P 500 Futures mark 0.30% loss to 3,260. The same portrayed the market's risk-off mood and gave extra strength to the yellow-metal prices. Due to the intensified tensions between the U.S. and China, uncertainty concerning fiscal package, and the surge in the Coronavirus (COVID-19) worries, the broad-based U.S. dollar gained some positive traction on the day. However, the U.S. dollar gains could be attributed to the losses in the U.S. stock futures. The gains in the U.S. dollar became the key factor that capped the further upside in the gold, as the price of gold is inversely related to the U.S. dollar price.

Looking ahead, the market players will keep their eyes on early-month activity numbers from China and the U.S. As well as, the USD price moves and coronavirus headlines will play a key role in determining the intraday momentum. Elsewhere, the updates concerning the U.S. fiscal package discussions can also offer intermediate moves to the precious metal.

Daily Support and Resistance

S1 1924.26

S2 1948.85

S3 1962.43

Pivot Point 1973.45

R1 1987.02

R2 1998.04

R3 2022.64

Gold soared distinctly to place a new high at 1,990 mark and sank suddenly right after, and now it's trading at 1,974 level. Gold may find immediate support at 1,970 level now, and bearish crossover below this level can lead its prices towards 1,963 mark. While the next resistance visits at 1,981 and over this, 1,989 will be facing a major resistance. Bullish bias seems dominant over 1,963 level. Good luck!

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