Daily Brief, May 12: Everything You Need to Know to Trade Gold Today
Arslan Butt • 2 min read
What’s up, traders.
The financial markets are exhibiting choppy sessions ahead of US CPI data, which is due to come out during the US session. It may have a direct impact on the precious metal gold. GOLD prices closed at 1697.43 after placing a high of 1712.09 and a low of 1691.89. Overall the movement of gold remained bearish throughout the day.
Prices fell on Monday after the US dollar gained strength on the back of the risk-on market sentiment. The risk appetite emerged on the back of fresh virus cases, which started reappearing after the easing of lockdown. The fresh wave of infections increased fear among investors and hit all asset classes, including gold. The beneficiary of such renewed widespread fears from the risk-on sentiment was the US dollar, which gained 0.45% on that day. The ten year US Treasury bond prices rose to 0.72%, which is the highest since April 6.
Gold prices have been supported by the market signals lately that US official interest rates could fall into negative territory next year if the Fed has to face more challenges in supporting the economy. Another reason behind the increased fear among yellow metal investors was the comeback of China with a reply to the recent US allegations.
China struck back on the accusations from the US with a detailed article named “24 lies”. The article consisting of 11,000 words was posted on the website of the Chinese Foreign Ministry on Saturday, which gave point-to-point refute to the US allegations. According to the article, the US politicians and media fabricated the lies and blamed them on China to shift their inadequate response to COVID-19.
The US has been blaming China for several weeks for the spread of coronavirus, accusing that China withheld important information. The President of the US, Donald Trump, and Secretary of State, Mike Pompeo, have also claimed that the virus originated in the Wuhan city lab where the outbreak was first reported. But they failed to provide any evidence for such allegation.
China has remained silent over these allegations so far, but now it has pushed back at the claims and has accused the Trump administration for blaming its failure to contain the virus within the United States and blaming China to strengthen the reelection chances for Trump.
Gold – XAU/USD – Daily Technical Levels
Pivot Point 1701.3
Gold – XAU/USD – Daily Outlook
Gold prices have dropped from 1,722 level to 1,704 in the wake of less worse than expected NFP figures. For now, the precious metal gold is likely to face immediate resistance at 1,711 level and closing of candles below this level may lead to gold prices towards 1,685. Gold’s selling bias remains dominant today.