Daily Brief, Jun 2: Everything You Need to Know to Trade Gold Today

Posted Tuesday, June 2, 2020 by
Arslan Butt • 2 min read

Good morning, fellas.

The precious metal gold prices closed at $1739.62 after placing a high of $1744.58 and a low of $1727.09.Overall the movement remained bullish throughout the day. GOLD prices settled little changed near $1750 on Monday on the back of the mixed market sentiment, where on one side investors were cautious after violent protests started across the United States and on the other side they were hopeful that the world’s largest economy would emerge fully from the coronavirus crisis.

On the coronavirus front, Moderna announced on Friday that it had started the phase 2 trials of its experimental coronavirus vaccine. In its phase 2 trial, 600 adult patients in 2 age groups had been given a high or low dose. In May, Moderna reported positive data for the phase 1 trial of its vaccine, which boosted its stock prices and made millions for its company and shareholders. Economists and doctors suspect that those early results might have been wrongly stated to enhance the company’s profits.

The fact that a potential vaccine has reached its phase 2 trials eased some tension in the market and kept a lid on additional gains in gold prices. Furthermore, due to increased tensions between China and the United States, chances for cancellation of the phase-one trade deal have increased. The concerns of the second wave of the virus persist in the market and now widespread protests across the US have also been added to the list of potential threats to the US economy.

Over the weekend, tens of thousands of people swarmed the streets of US cities to express their outrage and sorrow over George Floyd, a black man who was shot in police custody in Minneapolis. Reports about shootings, looting, and destruction in some cities have confused the mayors and governors about reopening their cities and states under lockdown over the past three months due to the COVID-19 pandemic. These protests in the US gave a push to gold prices and caused them to remain bullish throughout the day.

On the data front, at 18:45 GMT, the Final Manufacturing PMI from the United States came in line with the expectations of 39.8 for May. At 19:00 GMT, the closely watched ISM Manufacturing PMI was released, which decreased to 43.1 from the expected 43.5 and weighed on the US dollar. In April, the Construction Spending was recorded as -2.9% against the forecast -6.5% and supported the US dollar.

Poorer than expected release of long-awaited ISM Manufacturing PMI from the US exerted pressure on the US dollar and made it weak, which ultimately helped gold prices to surge further on Monday.

Daily Technical Levels
Support Resistance
1742.10 1764.60
1729.00 1774.00
1719.60 1787.10
Pivot point: 1751.50

Technically speaking, XAU/USD prices are consolidating in a narrow trading range of 1,743 – 1,724, which is extended by the upward channel. The 50 EMA and RSI are both support buying trends in gold; therefore, we should look for bullish trades over 1,428 areas. Continuation of a bullish trend can lead gold prices towards 1,743 areas and above this, the next resistance can be seen around 1,753 level.

Good luck!

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