Good morning, fellas.

Gold prices closed at $1710.53 after placing a high of $1735.38 and a low of $1708.78. Overall the movement of gold remained bearish throughout the day. GOLD prices followed the previous day’s trend and continued to fall on Tuesday and reached near the level of $1700 support on the back of increased risk appetite in the market. The risk-on market sentiment was caused by the reopening of the US economy after the coronavirus-induced lockdowns.

The yellow metal’s prices fell by more than 1% the day after more economies started to reopen and ease their lockdown restrictions, which raised the hopes for quick recovery and bolstered the risk appetite. The market’s risk-on tone drove the gold prices in the opposite direction due to its safe-haven status.

US stocks rose as investors became optimistic about the business restarts and also because of a possible coronavirus vaccine. Spain eased one of Europe’s strictest lockdowns and urged foreign tourists to return from July, while UK said that thousands of shopping centers will reopen next month and the US was also gradually easing restrictions.

On the other hand, a US-based big drugmaker, Merck & Co., said that it was working on two possible coronavirus vaccines to prevent the virus and an experimental pill for treating the infection. The chief executive officer of Merck, Kenneth Frazier, unveiled plans on Tuesday and showed concerns that it might take longer than expected to deliver a vaccine and make it available to the world.

Merck, one of the largest pharmaceutical companies and known for its 130-year legacy of developing the vaccine, is the same company that developed the first Ebola vaccine. The CEO of Merck on Tuesday broke his silence and revealed a multi-pronged approach to tackle the pandemic. This news decreased the demand for safe-haven and increased the risk sentiment making gold weaker on Tuesday.

However, the brewing trade tensions between the US & China over a new security law to be enforced on Hong Kong offered some support to the weakening gold prices. During times of political uncertainty, gold is used as a safer investment, and this kept a lid on losses on Tuesday. Meanwhile, the US CB Consumer Confidence was decreased to 86.6 for May from the expected 87.1 and weighed on the US dollar. This also helped in limiting the losses of the precious metal.

Daily Technical Levels

Support Resistance

1691.71 1727.76

1678.18 1750.28

1656.661763.81

Pivot Point: 1714.23

Gold – XAU/USD – Trade Setup

Gold is trying to break below an immediate support area of 1,707, which can be seen on the 4-hour timeframe. Closing of candles below 1,707 level may drive further selling to lead prices lower towards 1,698. Although the resistance is 1,716, selling bias remains solid and may lead prices towards 1,692 and 1,683.

Good luck!