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Gold Slips to One-Month Around $1,700 - Risk on Market Sentiment Plays! 


The safe-haven-metal prices erased some of its previous day's losses but still traded on the bearish track below the $1,700 level mainly due to the broad risk-on market sentiment in the wake of receding riots in the U.S.. As well as, the reason for the risk-on market sentiment could also be attributed to the optimism about the economic recovery from coronavirus which pushed investors to withdraw their money from the safe-haven assets.

The yellow metal prices are currently trading at 1,704.95 and consolidating in the range between 1,697.20 and 1,705.40. The U.S. President Donald Trump stepped back from its warning to use durable military power to stop the protests against the alleged police killing of Minnesota's George Floyd, which initially boosted the risk-on market sentiment undermined the safe-haven assets.

Moreover, the risk-on market sentiment was further bolstered by Trump administrations' willingness to provide funding for the coronavirus (COVID-19) vaccine programs. The latest headlines from European economies about planning to open the tourism sector also exerted some bullish impact on the risk sentiment and contributed to the safe-haven assets declines.

Apart from this, the European Central Bank (ECB) showed a willingness to inject more stimulus into the economy to tame coronavirus's impact, which eventually boosted the risk-on sentiment and gave confidence to the safe-haven assets bears. At the data front, the upbeat US ISM Non-Manufacturing PMI and ADP Employment Change also provided support to the market trading sentiment. As in result, Wall Street extended its previous day gains. Whereas the U.S. 10-year Treasury yields also gained over 6-basis points (bps) to 0.75%.

Despite the risk-on market sentiment triggered by the combination of factors, the broad-based U.S. dollar reported gain on the day and turned out to be one of the key factors that kept a lid on any gold increases. However, the investors started to turn into safe-haven assets, mainly due to the US-China intensifying tension. TheU.S. halted flights into the U.S. by Chinese airlines effective from June 16 after China stopped American carriers from re-entering China added in the US-China tussles. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.21% to 97.465 by 12:12 AM ET (5:12 AM GMT).

Looking forward, investors will keep their eyes on the macroeconomic data for immediate direction due to the calendar's lack of significant data/events during the Asian session. However, monetary policy meetings by the European Central Bank (ECB) and the U.S. Jobless Claims will be key.

Daily Support and Resistance

S1 1630.32

S2 1667.75

S3 1683.42

Pivot Point 1705.19

R1 1720.86

R2 1742.62

R3 1780.06

The yellow metal gold declined distinctly to put a low of 1,690 level on the announcement of surprisingly positive Advance NFP numbers, which turned bullish bias in the U.S. dollar. At the moment, the precious metal gold is expected to head towards 38.2% Fibonacci retracement at 1,706, and over this subsequent resistance is expected to be found around 1,712 and 1,717 that are extended by 50% and 61.8% Fibonacci retracement. While support lingers around 1,694 level today. Bearish bias seems imperative today. Good luck!

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