- Gold Prices (XAU/USD) drop 0.27%
- US/China tensions causing anti-risk sentiment
- Gold could test $2,000 if it breaks above $1750 level
Gold prices inched lower on Tuesday to around the $1700 levels as the market tries to figure what is the way forward at this critical level. Gold dropped 0.27% having reached highs of $1708 earlier in the session.
Growing anti-risk sentiment curtailing gold gains
It seems gains for bullion have been capped as equity markets begin to strengthen. The S&P 500 is up 0.1% while stock markets in china remained flat. Similarly, the volatility that has been witnessed on the dollar index seems to wane as it has consolidated around 99.80 after rising almost 150 pips in two days.
Currently, the macro environment is anti-risk because of growing concerns regarding brewing tension between the US and China about the origin of COVID-19 which could escalate into a trade war. Similarly, there are growing concerns about the possibility of a second wave of the virus as countries rush to reopen economies. Also, there is the bleak employment data and this could worsen at the end of the second quarter
The anti-risk sentiment stands to benefit the yellow metal but for now, investors are watching from the sidelines. Most importantly gold has been trapped in a narrowing price range around the $1,700 level. Currently gold is down 0.28% tat $1,705.75.
For now, it seems that the market is aiming higher in the long term. On the downside, gold will be looking for support at around $1,650 and if it moves above $1750 then the next level will be $1,800 and then maybe $2,000 in the long term. There are several reasons that we could grapple for risk sentiment which will add bullish pressure to prices.
Time : 06-05-2020
Pivot : $1701.28
Technical View : Long above $1706.57
Target : $1711.86, next 3 targets $1713.02, $1723.43 and $1734.93
Technical View : Short below $1696.01
Target : $1690.73, next 3 targets $1689.93, $1679.35 and $1668.84
Comments : Neutral
Last Price : $1705.75