- Gold hovers around $1,700 mark
- US/China tensions could offer support to bullion
- Strong US dollar restricting gold gains
On Monday, gold prices (XAU/USD) was hovering around the $1,700 mark, which has been a pivot for some time now. On Tuesday, gold snapped two-day lows and printed gains of 0.16% to take bids at $1,700.80, having hit an intraday high of around $1,702.32 following a wave of risk sentiment.
Gold bounces on growing risk sentiment
Although the brewing US/China tensions could offer support to bullion, there are concerns that the second wave of coronavirus has been putting pressure on the precious metal in recent times. To show, the risks equities in Asia registered losses while the US 10-year Treasury bonds are down 0.70% on the day, which is 3.5 bps.
It is important to note that currently, a strong US dollar is restricting gold’s gains as the dollar is said to have a negative association with the prices of commodities. The US dollar index, which is the gauge of the dollar against other currencies, refreshed its two-week highs before dropping to 100.27.
Gold prices could continue upwards towards the $1,750 levels the highs that bullion hit recently as risk sentiment continues to grow and fears of a global recession become apparent. Nevertheless if the US dollar continues to consolidate its strength then more gains for gold could be capped at current levels.
Global economic uncertainty could offer gold support because it is considered as a hedge against currency debasement and inflation. There a weak bullish sentiment for gold, which is hovering around $1,700 waiting for fresh trigger to surge to new levels. Gold prices are up around 12% so far this year.