The yellow metal prices flashing red and stuck near above $1,950 level mainly due to the emerging signs of a U.S. economic recovery, witnessed by the upbeat American Jobless Claims data, which eventually exerted a positive impact on the risk sentiment and contributed to the safe-haven losses. As in result, the yield on the U.S. 10-year Treasury note climbed to a top of 0.727% previous day, a level last seen on June 24.
Thus, the yellow-metal being a zero-yielding safe-haven asset, which tends to lose its bullish spark when bond yields increase. Elsewhere, the reason behind the upbeat market sentiment could also be associated with the latest positive statement about the U.S. economy by Trump. Across the pond, White House Adviser Larry Kudlow trying to keeping the probabilities of a good meeting with diplomats from Beijing in the wake of the dragon nation's buying of the American agricultural products, This also helped the market trading sentiment and undermined the yellow-metal prices.
In the meantime, the suspension of discussions for COVID-19 stimulus measures in the U.S. keeps challenging the risk-on market sentiment and capped further downside for the bullion. As well as, the risk-on market sentiment got an additional shock from disappointing Chinese data released earlier in the day. Elsewhere, the broad-based U.S. dollar reported losses on the day despite upbeat American Jobless Claims data, which helped the bullion prices to limit its deeper losses. At the moment, the yellow metal prices are trading at 1,950.31 and consolidating in the range between 1,945.29 - 1,962.27.
The U.S. President Donald Trump repeats his economic optimism in the wake of upbeat American Jobless Claims data. In contrast, the White House Adviser Larry Kudlow praising China's purchase of U.S. agricultural products. Let me remind you, the representatives from the world's top two nations are set to meet during the weekend to restart the stuck phase one deal talks.
At the data front, the U.S. reported 963,000 initial jobless claims for the past week, lower than the 1.1 million in forecasts. This data initially gave support to the broad-based U.S. dollar and market trading sentiment.
On the negative side, the uncertainty surrounding the US-China trade relations and the much-awaited coronavirus (COVID-19) relief package from the U.S. keep challenging the risk-on market sentiment. At the US-China front, the long-lasting tussle between the two biggest economies remains on the slippery track as U.S. President Donald Trump recently said to have an unfriendly attitude towards China. Elsewhere the U.S. Democratic Party leaders keep avoiding making compromises on their offers below $2 trillion.
Also challenging the risk-on market sentiment was the COVID-19 crisis as the concerns about viruses also become unclear amid lesser testing. Whereas, the market trading sentiment seemed rather unaffected by the disappointing Chinese data released earlier in the day. At the data front, July's industrial production increased by 4.8% year-on-year but missed the 5.1% increase in forecasts. In the meantime, retail sales dropped 1.1% in the same month, against the forecasted 0.1%. The unemployment rate remained unchanged at 5.7%.
Despite the upbeat U.S. data, the broad-based U.S. dollar failed to maintain its early-day gains and took the offer on the day as doubts persist over the global economic recovery from COVID-19. As well as, the risk-on market sentiment also weighed on the American currency. The traders will keep their focus on the U.S. Retail Sales m/m data.
Daily Support and Resistance
S1 1736.59
S2 1823.07
S3 1869.62
Pivot Point 1909.55
R1 1956.11
R2 1996.03
R3 2082.51
The precious metal XAU/USD hasn't improved much as it proceeds to trade within a narrow trading range of 1,940 - 1,955, particularly after reaching support at 1,880 mark. The bullish trendline has backed gold prices at 1,880, and closing of Doji candle over this level implies the chances of bullish reversal in gold prices. Beyond the 1,955 mark, the precious metal may encounter the next resistance at 1979/81. Whereas, violation of 1,940 levels on the lower side can drive selling unto 1,913 levels today. Good luck!