Gold prices have refreshed the intraday high to around $1,887.32, currently up 0.42% Gold prices have refreshed the intraday high to around $1,887.32, currently up 0.42% around $1,885.70, during the Asian session. The precious metal recently picked bids after President Trump showed some readiness to provide help to airlines and small businesses.
Nevertheless, significant rumors about the European Union’s (EU) steel tariff over the Asian countries appear to question the risk-on mood. After previously rejecting over $2.0 trillion stimulus package, the US president recently tweeted a proposal of $160 billion of cumulative help. That development supported the S&P 500 Futures to reverse the previous losses.
Nonetheless, stocks in Asia still trade mixed amid the unconfirmed talks over the European Union’s steel tariffs of Taiwan, China, and Indonesia. Moreover, the health crisis woes in the bloc, and the UK join the Brexit uncertainty that is weighing heavily on the trading sentiment.
It should also be noted that the US dollar index (DXY) drops from the new weekly high of 93.90 to 93.81 at the time of writing. The US dollar’s gauge compared to the major currencies marked the most significant gains in two weeks the previous day.
It is worth to note that the inverse correlation between the US dollar and gold might be behind the metal’s latest moves. Moving ahead, updates from President Trump about COVID-19 or stimulus will take an integral place while investors look for market clues. All this is happening ahead of speeches from the US Fed policymakers and later the ECB’s President Christine Lagarde.
The US FOMC minutes and any other news about Brexit and the pandemic will be of importance to determine where the gold market prices will head towards.
A two-month-old falling trend line that is currently located around $1,920 adds to the upside resistances beyond the $1,900 level. In the meantime, the September lows around $1,848 may encourage sellers located below the intraday bottom surrounding $1,873.
Gold’s steep drop and breach of the 1681.30 support indicates that recovery from 1848.38 was completed at 1921.01. the correction was capped after rejection by short term falling trend line resistance. Any drop below that will expose the next support located at 1828.39.
A break there will extend gold’s correction from 2075.18 to 61.8% retracement of 1670.6 to 2075.18 at 1825.18. That will remain the favored scenario for now provided that the 1921.01 resistance holds. Also, if such a development happens that way, it might be accompanied by a major rebound in the dollar.