Today in the Asian trading session, the yellow metal prices stopped its previous day sharp declines and recovered from the $1,921.97, the one-week low, to the $1,942 level. However, the bullish sentiment around the gold prices could be attributed to the risk-off market sentiment, driven by the Sino-American tussle's escalation. The uncertainty over the American stimulus package also weighed on the market trading tone and contributed to the yellow-metal gains. On the other hand, the hopes of the coronavirus (COVID-19) vaccine failed to provide any support to the market trading sentiment that kept gold bulls active.
On the contrary, the broad-based U.S. dollar modest strength ahead of U.S. jobs data's release capped any further gains in the yellow metal prices. The yellow metal prices are currently trading at 1,935.78 and consolidating in the range between 1,925.89 and 1,942.07. Moving on, the market traders seem cautious and refrained from placing any strong position as they keenly await the American employment figures.
Be it the American lawmakers' failure to offer any positive announcement on the coronavirus (COVID-19) relief package or the recent escalation in the Sino-American tussle, not to forget the downbeat US ADP data; all factors have weighed on the market risk tone. This, in turn, underpinned the safe-haven yellow metal. The U.S. House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin recently showed consensus to stop-gap funding to avoid the government shutdown as the previous bill will expire on September 30. Despite this, the differences between the opposition Democratic Party and the ruling Republican remained on the card, as determined by diplomat Pelosi the previous day.
At the US-China front, China's Global Times (G.T.) recently warned the U.S. to cut its U.S. debt holdings after the Trump administration imposed additional sanctions over Beijing diplomats. China may slowly reduce its holdings of U.S. Treasury bonds to approximately $800 billion from the current level of more than $1 trillion as the U.S. administration continued its attack on the Dragon Nation. As in result, the market risk-off sentiment supported the gold prices.
On the positive side, the hopes of the coronavirus (COVID-19) vaccine failed to help the market sentiment on the day as the market negative headlines overshadowed the vaccine-related optimism and kept the trading sentiment negative. Anyhow, these hopes might play a key role that could help the market trading sentiment to limit its deeper losses.
At the USD front, the broad-based U.S. dollar managed to keep its gains throughout the day as the traders were cheering the Upbeat U.S. data. However, the U.S. dollar gains seem rather unaffected by the downbeat US ADP data, at least for now. The U.S. dollar gains were further bolstered by the risk-off market sentiment that kept the market's safe-haven demand high. Thus, the gains in the U.S. dollar capped any further gains in gold prices as the price of gold is inversely related to the U.S. dollar price. Whereas, the U.S. Dollar Index Futures that tracks the greenback against a bucket of currencies inched up at 92.47 by 10:23 PM ET (2:23 AM GMT).
Moving on, the market players seem cautious as they all keep their eyes on the Federal Reserve (Fed) policymakers' dovish tone and August month employment data from the world's largest economy. From the forecasted view, the headline Nonfarm Payrolls (NFP) to fall from 1,763K before 1,400, whereas the Unemployment Rate may drop to 9.8% against 10.2% previous readouts.
Moving ahead, the market traders will keep their eyes on the U.S. employment data, USD price dynamics, and coronavirus headlines, which could hint the fresh direction for the gold. As well as, the coronavirus (COVID-19) updates, U.S. stimulus news, and the US-China tensions could not lose their importance on the day.
Daily Support and Resistance
Pivot Point 1948.89
The yellow metal gold prices declined distinctly following a violation of the support mark of 1,958. This mark may act as resistance presently, and beneath this level, the gold can trade-in selling more until 1,911. A slight retracement can be seen until the 1,955 level. Gold may trade sideways ahead of NFP and the unemployment rate coming out during the U.S. session today. An upward breakout can drive a gold price higher until 1,979, and a bearish breakout can trigger selling until 1,910. Good luck!