On Thursday Gold (XAU/USD) prices gained traction following a pullback the previous day to end the day at around $1,738. It seems the yellow metal is unaffected by the strengthening of the US dollar.
Concerns of a global recession helped keep gold prices intact
This came at the back of a marginal fall of employment as well as optimism on easing COVID-19 cases. However, growing concerns of a global recession managed to keep the appeal of gold intact. Spot gold gained 0.5% to $1,724.12 per gold ounce almost near a 7-year high while US gold futures were up 0.7% at $1,751.60 per ounce.
The US expects the economy to open in the coming weeks and as a result, gold and equities seem to be focused beyond the COVID-19 epidemic. Because of the upbeat sentiment, there is hope that things are going to be normal. The most important aspect is that bullion has received significant support in an environment where central banks have instituted measures to prevent a downturn by cutting rates to zero.
The latest unemployment data shows that unemployment claims were 5.2 million this week dropping slightly from last week’s 6.6 million. However, the number of claims in the past month is around $20 million.
Gold began the week on a high with prices pushing to record seven-year highs. The yellow metal looks set to be headed to support levels of $1701.87 which was the year’s high set last month. Following Thursday’s pullback gold showed that its resistance levels could be around $1,728.33.
If the prices could drop below these levels then it means bullion could return to the $1600 levels witnessed at the beginning of the month. However, judging from the current sentiment and fundamental market conditions it is unlikely that the prices could fall further in the short term. This is despite the presence of little sentiment to trigger the precious metals to 2012 highs lying slightly beyond current price levels.