Gold flat-lined around $1715 level, downside seems limited amid weaker risk sentiment
- Gold lacked any firm direction and seesawed between tepid gains/minor losses on Thursday.
- The downside remains cushioned amid fears about the second wave of coronavirus infections.
- Trump’s comments provided a goodish lift to the USD and kept a lid on any strong move up.
Gold reversed a knee-jerk slide to the $1711 area and spiked to fresh weekly tops in the last hour, albeit struggled to make it through the $1720-22 supply zone.
A combination of diverging forces failed to provide any meaningful impetus to the commodity and led to a subdued/range-bound price action through the mid-European/early North American session on Thursday. The downside remained cushioned amid fears about the second round of coronavirus infections.
Adding to this, fading hopes for a quickly global economic recovery weighed on investors' sentiment. This was evident from a fresh leg down in the equity markets, which extended some support to the precious metal's safe-haven status, albeit a pickup in the US dollar demand capped the upside.
The greenback caught some aggressive bids after the US President Donald Trump advocated a stronger dollar and said that it will help the economy during the recovery post coronavirus crisis. Commenting on trade relations with China, Trump reiterated that he will not be renegotiating the trade deal.
Meanwhile, a weaker tone around the US Treasury bond yields extended some additional support to the non-yielding yellow metal. Bulls, however, are likely to wait for a convincing break through the $1720-22 resistance zone before positioning for any further near-term appreciating move.
The mentioned barrier marks a one-month-old descending trend-line, which if cleared decisively should assist the commodity to aim back towards retesting multi-year tops near the $1748 region.
Technical levels to watch