Daily Brief, Jun 16: Everything You Need to Know About Gold Today

Daily Brief, Jun 16: Everything You Need to Know About Gold Today

Posted Tuesday, June 16, 2020 by
Arslan Butt • 2 min read

Good morning, traders.

The precious metal gold prices closed at $1724.87 after placing a high of $1734.62 and a low of $1704.21. Overall the movement of GOLD remained bearish throughout the day.

A day before, the yellow metal prices eased as demand for safe-havens decreased after the fresh rise in risk appetite despite the increasing number of coronavirus cases in the United States and other countries. However, after the Fed announcement in the late session, gold recovered some of its daily losses and continued moving in an upward direction.

Last week, gold jumped about 2.6% on the back of rising fears of the second wave of coronavirus and concerns about renewed lockdowns. However, on Monday, gold was lower due to a stronger US dollar after the White House adviser Larry Kudlow said that President Donald Trump was determined not to impose lockdown restrictions again over the new rise in COVID-19 cases.

Kudlow said that the economy was going to rocket higher and higher in summer and that White House was not interested in closing down the economy as it did not believe that it was the second wave of the virus. According to Johns Hopkins University, the coronavirus cases in the United States touched 2.096M with more than 115K deaths.

However, the autonomy for closing or opening the economies lies with the state owners and not Trump or Kudlow. Despite this, Kudlow’s remarks on Monday sparked a recovery in the stock market, which was desperate for some good news. On the data front, the Empire State Manufacturing Index for June came in as -0.2 against the expected -30.0 and supported the US dollar which was already strong in the market. Stronger US dollar dragged the already dropping gold further.

However, in the late trading session, gold prices started to recover on the back of an announcement made by Federal Reserve that it would buy individual corporate bonds in the secondary market. The Fed announced adding functions in its secondary market corporate credit facility as part of continuous support to market functioning and to ease credit conditions. The program can buy almost $750 billion worth of corporate credit.

This latest move by the Federal Reserve came in less than a week after the downbeat outlook of the US economy because of the coronavirus pandemic. The program will allow companies to continue borrowing money at a time of high financial stress due to the steep economic decline from the pandemic.

After this announcement by the Fed, gold took its pace and recovered some of its daily losses; however, it failed to break its bearish bias as risk appetite was still present in the market that kept a lid on any additional gains in gold on Monday.

Daily Brief, Jun 16: Everything You Need to Know About Gold Today

Daily Technical Levels

Support Resistance

1710.56 1746.41

1690.53 1762.23

1674.71 1782.2

Pivot Point:1726.38

Gold is also trading with a bullish bias, but currently facing resistance at 1,731 level. Below this, selling can be seen until the next support area of 1,722 and 1,717 level. While the closing of candle or violation of 1,731 will extend buying until the next target level of 1,744.

Good luck!

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