Good morning, traders,

The precious metal gold prices closed at 1802.15, after placing a high of 1813.36 and a low of 1797.23. Overall, the movement of gold remained bullish throughout the day. One day previously, gold prices surged after posting losses for the previous two days, on the back of a downbeat statement from the WHO, increasing concerns for economic recovery, due to the surging number of coronavirus cases worldwide. The ongoing tensions between the US and China also added to the gains of the yellow metal on Monday.

The Director-General of the WHO, Tedros Adhanom Ghebreysus, warned on Monday that too many countries were heading in the wrong direction, as the virus was the number one public enemy. If basic protocols were not followed, the pandemic might continue to escalate dramatically.

Dr. Tedros said that 230,000 new cases were confirmed on Sunday, of which 80% were from 10 nations and 20% from just two countries. The United States and Brazil were hardest hit by the pandemic. He warned that there would be no return to the old normal for the foreseeable future.

Tedros also said that the WHO had still not received formal notification of the US pullout that Trump had announced.

This statement by the WHO raised concerns about economic recovery and helped gold prices to gain traction on Monday. On the US-China front, the Chinese government announced sanctions against US officials, including the Republican senators Marco Rubio and Ted Cruz. This came in response to the US sanctions over Beijing’s human rights violation of ethnic and religious minorities in Xinjiang Province.

This news raised tensions amongst the world’s two biggest economies, lending strength to the safe-haven appeal that supported gold prices. The New York Federal Reserve Bank President, John Williams, said that the global pandemic that had shaken the market in the spring and disrupted daily life across the world would not lead to an extension of the 2021 deadline for dropping the Libor.

Libor is the average interbank interest rate at which a selection of banks on the London money market are prepared to lend to one another. Williams said that lenders and borrowers should get their transition plans in place now, because the COVID-19 crisis will not cause an extension in the 2021 deadline for Libor. He urged the banks to stop using Libor in new financial contracts.

The continuous increase in the number of COVID-19 infections in the United States has weighed on growth prospects, slowing the inflation rate and thereby helping the yellow metal to gain traction and rise on the board. On the coronavirus front, the surge in the number of people infected by the virus continued to rage uncontrolled across the US, as 35 states reported new cases, including record numbers from Florida. On Sunday, Florida’s health officials said that a record high of 15,300 new cases was reported in a single day.

Meanwhile, according to reports on Monday, the US Trump administration was targeting US Disease Chief Dr. Anthony Fauci, as tensions rose between the president and health experts. This news gave the risk-on market sentiment a push, leading to a decrease in the daily gains for gold on Monday.

On the data front, the US Federal Reserve Budget was released at 23:00 GMT, showing a deficit of 864.1 Billion dollars, against the expected deficit of 860.0 Billion, lending support to the US dollar, which in turn helped introduce the selling bias amongst gold traders in the late session on Monday.

Daily Technical Levels

Support Resistance

1801.61 1806.16

1799.23 1808.33

1797.06 1810.71

Pivot point: 1803.78

Gold is trading with a bearish bias at 1,797, with immediate support in around the 1,795/93 area. On the higher side, resistance remains somewhere on the 1,801 to 1,809 level today. Simultaneously, a bearish breakout of 1,793 support could lead gold prices further down, towards the 1,787 and 1,773 levels. During the US session, a breakout could be experienced upon the release of CPI and Core CPI figures. Good luck!