Daily Brief, July 15 – Everything You Need to Know About Gold on Wednesday!
Arslan Butt • 3 min read
Good morning, traders,
The yellow metal GOLD prices closed at 1809.33, after placing a high of 1810.96 and a low of 1790.40. Overall, the movement of gold remained bullish throughout the day. Gold prices were firm above the key $1,800 level on Tuesday, having been pushed up by the concerns over increasing coronavirus cases globally, as many countries have reintroduced restrictions to contain the outbreak.
On Monday, the World Health Organization warned that the pandemic would only get worse if countries failed to follow strict precautions. The UN agency said there were no shortcuts out of the epidemic, as the global infection count had crossed the 13 million mark. Given the rise in cases of infection worldwide, cities and states across the world reverted to tighter coronavirus restrictions, in an effort to fight the recurring outbreak.
From midnight on Tuesday, Hong Kong will re-impose strict new social distancing measures, the strictest in the region since the start of the pandemic. The authorities of Hong Kong warned that the risk of a large-scale outbreak was extremely high. The Philippines has also announced that they will restrict a quarter of a million people in Manila, in order to decrease the infection rate. The Philippines has the second-highest number of infections in south-east Asia with over 57,000 cases.
According to the Johns Hopkins University tracker, the US has reported roughly 60,000 new cases a day for almost a week. The spike of coronavirus infections in America’s most populous state forced California to re-impose restrictions on businesses and public spaces. California has reported more than 330,000 cases, with more than 7,000 deaths. The state government has closed all bars, restaurants, museums, and cinemas, in an effort to contain the spread of the virus.
Meanwhile, the Trump administration has ramped up its war with Anthony Fauci, the federal government’s top public health expert, over his handling of the crisis. About 5.4 million Americans have lost their health insurance in the pandemic, the highest number to lose coverage through job losses. Italy has also imposed a new set of restrictions to control the coronavirus pandemic, starting from July 15. The Italian Minister of Health established new rules in a decree that will remain valid until the end of the month. The Hungarian government also announced the introduction of international travel restrictions, with tightened border controls from Wednesday, in an effort to reduce the chances of a new wave of the coronavirus.
On Tuesday, the cases reported from Australia passed the 10,000 mark, spurring the state of New South Wales to introduce new restrictions, which include fines of up to AU$55,000, with additional penalties of AU$27,500, for violations. In Victoria, staff from the private sector, including airlines, telecommunications, banks, and 1,000 additional members of the Australian defense force, will be deployed to help in the efforts to contain COVID-19.
Experts have warned that Britain must start intense preparations for the second wave of the coronavirus, which in a worst-case scenario has the potential to kill as many as 120,000 hospital patients. In Mexico, an entire Hospital has been put in quarantine, with 68% of its staff testing positive. All the lockdowns mentioned above sparked concerns over the second wave of the coronavirus, raising demand for a safe-haven appeal, which in turn pushed gold higher on Tuesday.
On the US-China front, investors are keeping a close eye on growing tensions between the US and China, over the South China Sea region. Beijing announced that it would slap sanctions on Lockheed Martin for its involvement in the latest US arms sale to Chinese-claimed Taiwan. The escalating tensions between the world’s two largest economies raised the demand for safe-haven assets, like the yellow metal. On the data front, the US CPI for the month of June increased to 0.6% from 0.5%, providing support for the US dollar, which kept a lid on additional gains in gold prices.
Daily Technical Levels
Pivot point: 1806.47
GOLD is facing strong resistance at the 1,810 level and closing of candles below this level could extend selling until the 1,802 support level. On the lower side, the next support level is likely to be found at around the 1,795 level. On the higher side, a bullish breakout on the 1,809 level could extend the buying trend to the 1,817 level. A selling bias seems dominant today. Good luck!