- Gold prices drop more than 1% below $1,700
- Investor risk appetite improving following the easing of lockdowns
- Gloomy employment data to support gold prices
On Wednesday, Gold prices (XAU/USD) dropped 1% to move below the $1,700 mark as the dollar continues to strengthen, and investor risk sentiment improves with countries easing coronavirus lockdowns. Equally, the prospect of gold miners resuming operations means an increase in gold supplies, which will put more pressure on prices.
Gold prices drop on a strong dollar and enhanced risk sentiment
Spot gold was down 1.2% at $1,685 per ounce while US gold futures dropped 1.3% to $1,688.30 per gold ounce and thus reducing its lead to $3.3. The drop came following the announcement that the largest gold refiners in the world will resume all operations. Gold prices are up 11% year to date as the global economy grapples with the impact of COVID-19.
TD Securities’ commodity strategies head Bart Melek attributes the drop to the increase in supply as well as growing risk appetite as countries ease lockdowns. US equities opened higher on optimism that business activity will pick regardless of the over 20 million unemployment claims in April. The rise of the dollar index by 0.4% further dented gold’s appeal.
Time : 07-05-2020
Pivot : $1693.46
Technical View : Short below $1686.33
Target : $1679.21 next 2 targets $1666.92 and $1652.58
Comments : Weak Bearish
Last Price : $1691.95
Gold is often preferred as a haven because is a hedge against currency debasement and inflation. Investors will be eying Friday’s official US employment numbers that are expected to worsen as several job losses are expected. These gloomy numbers are likely to preserve the haven bid of gold.
Bullion is still range bound, and a little market impetus could lead to gold breaking out of the $1674.30 and $1,729.19 range that has held the market over a month. At the time of writing, gold was up 0.20% at $1,691.95.