Gold Price Analysis: Mildly bid near three-week top above $1,700
- Gold prices bounce off intraday low amid a fresh wave of risk-on sentiment.
- Increasing odds of no negative rates, the likelihood of another stimulus favor risks off-late.
- US-China tension keeps traders in a cautious mode ahead of China's data dump.
- US consumer-centric figures, trade/virus catalysts will be important for fresh impulse.
Gold prices recover from the intraday low of $1,728.84 to currently around $1,733, up 0.12% on a day, during the early Friday’s Asian session. In doing so, the bullion snaps three-day winning streak, while also stepping back from the highest since April 24, amid risk reset.
The global markets seem to step back from the earlier risk-off sentiment amid the latest wave of optimism backed by increasing odds of another stimulus from the US. Also favoring the mood could be a few more comments from the Fed policymakers defying negative Fed rates.
Earlier during the day, markets turned risk-averse after the US Senate passed a bill enabling the administration to levy fresh sanctions on Chinese officials involved in the Xinjiang case. Further, the risk aversion wave might also have taken clues from a separate Republican bill, which is in pipeline, enabling President Trump to sanction China during the virus outbreak investigation.
Additionally, a sustained increase in the latest coronavirus (COVID-19) numbers keep fears of the virus wave 2.0 on the cards. As a result, the global policymakers’ rush for economic restart might have to catch a breath.
Amid all these catalysts, US 10-year Treasury yields pause the previous two-day declines near 0.62% whereas stocks in Japan post mild gains by the press time.
Moving on, China’s April month Industrial Production and Retail Sales will offer immediate catalysts ahead of the busy US calendar comprising the key Retail Sales. However, updates concerning the US-China relations and the virus outbreak will not lose its importance in the meantime.
Technical analysis
The bullion’s U-turn from the monthly ascending trend channel’s resistance line seems to drag the quote towards the one-month-old support-turned-resistance line near $1,720. Though, the said channel’s lower line, at $1,700 now, can limit the further downside of the precious metal. It should, however, be noted that a bullish channel and a sustained break of the one-month-old falling trend line, coupled with bullish MACD, keep the traders hopeful of revisiting $1,737 immediate resistance.