Good morning, fellas.
The number of coronavirus cases continues to rise around the globe, and team FX Leaders hopes everything is fine on your side. Almost every economy is taking action to cope with the COVID-19 and the US has recently released a new package that may impact global financial markets today. In this update, we are going to see how it’s likely to impact gold prices.
On the fundamental side, eyes will remain on the US unemployment claims, UK BOE policy rate, and US GDP figures. The Bank of England is expected to release a dovish policy, which may drive a selling trend in Sterling later today. On the other hand, the US GDP is likely to drop in the wake of an increased number of coronavirus cases around the globe, which may have slowed down the production activity in the market.
Speaking of gold, the safe haven metal prices were flashing red and dropped 0.5% to $1,606 after the United States Senate reached a deal on its huge COVID-19 relief package. However, gold prices failed to turn green despite the broad-based US dollar weakness. At the time of writing, gold is currently trading at 1,621.70 and consolidates in the range between 1,619.20 and 1,645.25.
The yellow metal is currently trading at $1,606 per ounce, representing a 0.5% decline on the day. Meanwhile, the dollar index, which tracks the value of the greenback against majors, is currently trading near 100.65 – down 0.27% on the day. Whereas, the greenback is getting weak time by time in the wake of strong expectations of the US fiscal stimulus and the upbeat market mood.
The Senate Democrats and Republicans finally agreed on the Trump administration-backed a $2.2 trillion relief package plan and eventually passed the US Senate and will likely put to the vote in the lower house on Friday. As a result, the US equities could continue its previous day’s recovery rally, which triggered deeper losses in the safe-haven gold prices.
On the other hand, the Asian equities markets were also flashing confused signals due to the continuous spread of COVID-19, and traders are cautious about placing any positions ahead of any fresh news about the virus. The World Health Organisation said the number of global cases topped 400,000 as of March 25.
The coronavirus outbreak is not showing any sign of slowing down in the US, Japan, and European countries. So in that case, gold may find haven bids ahead. Consequently, we still expect a decisive turn in gold prices due to economic fallout from the coronavirus crisis in the wake of safe haven demand.
Daily Support and Resistance
Pivot Point 1614.72
Gold is facing immediate support around 1,597, which is a vital trading level today. A bearish violation of this mark can extend selling until 1,588 and 1,579. Whereas, a continuation of a bullish trend over 1,597 level can spur buying unto 1,615. The overall sentiment is pretty mixed, but bearish bias may prevail considering increased stimulus from the US economy to cope with coronavirus. Good luck!