Home Gold News Gold (XAU/USD) Firms At 7-Year Highs As Dollar Weakens

Gold (XAU/USD) Firms At 7-Year Highs As Dollar Weakens

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  • Risk Aversion
  • U.S Coronavirus Uncertainty
  • Trade War Geopolitical Tensions

Gold (XAU/USD) bounced back after edging lower, Monday morning, as risk sentiment took center stage in response to a spike in coronavirus infections in the U.S. The precious metal remains bullish with pullbacks emerging as support level from where bulls have come and continued to push prices higher.

Gold Upbeat

A surge in coronavirus cases in the U.S. is a catalyst likely to support gold prices after a recent pullback from eight-year highs. The bullion is up by more than 10% for the year, with the upward momentum not showing any signs of slowing down.

Time                            : 07-06-2020

Pivot                           : 1772.88

Technical View           : Long Above 1774.59

Target                         : 1776.10 – 1779.94 – 1783.05

Comments                  : Bullish

Last Price                    : 1778.90

A highly valuable commodity, Gold tends to perform opposite of stocks and bonds. The precious metal upside momentum has so far been limited by a spike in stocks to record highs. However, with the global outlook amidst the COVID-19 pandemic looking gloomy, the focus is slowly shifting towards the yellow metal.

Traders are increasingly shunning risky assets such as stocks and commodities in favor of safe-havens such as Gold given the potential fallout of the second wave of coronavirus infections in the U.S. In the first four days of the month the U.S has registered record numbers of coronavirus infections taking the total tally close to 3 million.

A spike in coronavirus infections is likely to curtail economic activities given the ever-growing risk of lockdown, as was the case in the first half of the year. Tepid economic recovery should see interest rates around the world remaining at record lows a development likely to support Gold.

Gold outlook

Economists are already pointing out to more debt in the market as governments race against the clock to stimulate struggling economies. A debt crisis coupled by low-interest rates should continue to favor gold prices as traders scamper for safety in the bullion.

Trade wars and geopolitical tensions are other developments poised to support gold prices going forward. The U.S is already fuelling a trade standoff with the European Union having warned it plans to impose trade tariffs on EU goods worth $3.1 billion. A standoff between the U.S and China over Hong Kong is another development that continues to fuel demand for safe-haven such as Gold.

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