Good morning, traders,

Welcome back to another exciting week. Last week, the gold prices closed at $1,774.60 after placing a high of $1,777.08 and a low of $1,772.56. Overall, the movement of gold remained flat, but slightly bearish throughout the day. The gold prices were little changed at the end of the week, and remained flat, due to a mixed sentiment across the market. On one side, the tensions were rising as a result of the continuous increase in the number of coronavirus cases across the globe, and on the other side, the risk sentiment was fueled by the positive US & Chinese economic data. The opposing sentiments kept gold prices under pressure, and hence, the yellow metal failed to show any significant movement on Friday.

The International analyst of China Bank, Xiao Fu, said that gold prices were sustained because of uncertainty surrounding the second corona wave and the easing by central banks across the world. He said that the economy would need more than positive US job reports to move onto a strong footing. He added that gold will remain well-supportive, at above $1,750, but it will move within a tight range.

On the US-China front, the relations between the two nations were already deteriorating over a series of issues including trade, the COVID-19 pandemic, Taiwan and Hong Kong, and on Friday, the US deployed two aircraft carriers in the South China Sea, which is seen as a significant show of force.

Furthermore, some reports came in, indicating that China was forcing birth control and sterilization in Uighurs, in order to suppress the Muslim population. However, China’s foreign ministry spokesman responded to this news on Monday, calling it fake. A worker at Newcastle University in the UK, Joanne Smith Finley, said that “it’s genocide, full stop. It’s not immediate, shocking, mass-killing, on-the-spot-type genocide, but it’s a slow, painful, creeping genocide.” In response to this, 75 members of the US Congress sent a letter to the White House, urging President Donald Trump to make a formal decision on whether China’s attitude towards Uighur Muslims and other groups constituted an atrocity.

Meanwhile, US federal authorities have seized a shipment containing 13 tons of products worth $800,000.00, made from human hair, believed to have been taken from Muslims in labor camps in China’s western Xinjiang province. The executive assistant commissioner of CBP’s office of trade, Brenda Smith, has said that the production of these products constituted very serious human rights violations, and any entities that use illegal and inhumane practices, who seek to do business with the US, will not be tolerated in US supply chains.

All these US-China tensions and other geopolitical considerations kept the safe-haven demand intact and gold prices on the upside, whereas the data from China’s services sector on Friday and the US labor department on Thursday gave a push to the risk sentiment in the market, weighing on gold prices.

At 6:45 GMT, the Caixin Services PMI from China rose to 58.4, from the expected 53.8 in June, showing an expansion in the services sector. This indicated better economic conditions and raised hopes for a sharp V-shaped recovery, giving rise to a risk appetite.

The US job data released on Thursday, which showed that the US had created 4.8M jobs in May – the highest ever recorded – also added to the risk appetite. The positive data from the world’s biggest economies kept the gold prices under pressure, and as a result, they remained flat throughout the day and failed to show any significant movement.

Daily Technical Levels

Support Resistance

1,773.64 1,799.04

1,757.27 1,808.07

1,748.24 1,824.44

Pivot point: 1,782.67

 GOLD continues trading in a wide trading range, on the 1,773 to 1,766 level. The upward trendline on the hourly timeframe is supporting the bullish bias in gold. On the lower side, support for gold prevails at around the 1,759 and 1,749 levels. On the flip side, a bullish breakout on the 1,773 level could extend the buying trend to the 1,789 level. Good luck!