Gold bears couldn’t breach the $1,932 price support level, at the time this report was written, but odds on the yellow metal further weakening towards the $1,900 critical support level is relatively high as the U.S dollar of late has been bouncing up strongly from its two year low.
In addition, Gold traders are aware that the bull’s strength past the $1,993 seems to be out of gas. It’s most unlikely that gold prices would breach its record high again around $2,075 in the mid-term.
A stronger greenback usually put pressure on the yellow metal. That said, the U.S dollar index, which tracks the dollar’s performance against a basket of major currencies, rose to close to 93, making the yellow metal more expensive for holders of other major currencies.
Also, a vital macro curbing the yellow metal prices of late is the persistent surge in the US and global equity markets amid hopes of economic recovery is negative for the precious metal.
Traders are now fixing their attention on today’s initial US jobless claims report and Friday’s non-farm payroll data. These will help traders gauge the economic strength of the world’s largest economy, meaning a strong positive data report could send the price of gold tanking below the $1,900 price support level.
Gold traders and global Investors have piled into the safe-haven asset, pushing the price up by 30% this year, triggered on growing concerns that massive stimulus packages released globally would curb the negative disruption of the COVID-19 pandemic and push inflation relatively higher.
However the relatively bearish seasonality for the yellow metal in the month of September also seems to be in play as gold prices drift lower, which is now getting compounded by reduced buying interest over in recent days.