Good morning, traders,

The precious metal gold closed at 1,796.75, after placing a high of 1,813.33 and a low of 1,794.88. Overall, the movement of gold remained bearish throughout the day. Gold edged lower on Thursday, on the back of a strong US dollar; however, the losses were limited, due to the mounting concerns over increasing coronavirus cases and worsening relations between the US and China.

The US dollar was strong across the board on Thursday, due to strong macroeconomic releases. At 17:30 GMT, it was reported that the Core Retail Sales for June increased to 7.3% against the expected 5.0%, providing support for the US dollar. In June, retail sales also increased to 7.5%, against the expected 5.0%, supporting the US dollar.

The Philly Fed Manufacturing Index also rose to 24.1 from the 20.0 that was forecast, lending support to the US dollar. The strong US dollar weighed on gold prices, due to their inverse relationship, and caused a sudden fall for the yellow metal.

On US-China front, US Justice Secretary William Barr accused Hollywood and US tech firms of collaborating with the Chinese government, with a view to doing business there. Barr said that such actions could risk undermining the liberal world order.

Speaking at the Gerald Ford Presidential Museum, he warned that US firms were giving up secrets and compromising values, under pressure from the Chinese, at the risk of making the US vulnerable and dependent on China for certain goods.

This was the latest criticism of China by the White House and other US officials. He warned that the Disney and  American cooperation with Beijing would undermine competitiveness and prosperity. He urged US firms to defy Chinese demands, and stated that if an individual company is not able to take a stand, then firms should combine.

The tensions between the US and China have been increasing over many issues lately. This week, the US removed Hong Kong’s preferential trade status after China imposed new security laws on Hong Kong. Earlier, the US imposed visa restrictions on certain employees of the Huawei Tech Company, due to the Chinese Communist Party’s human rights abuses in the Xinjiang region of northwest China.

In response to this, on Thursday, the Chinese technology giant, Huawei, expressed regret over the US move to restrict its employees from visiting the United States. Huawei said that this move by the US was an unfair and arbitrary action. The continuous tensions between the US and China kept the risk mode under pressure and supported gold in checking its declines.

Meanwhile, the risk sentiment was supported by the unexpected expansion in the economic growth of China. On Thursday, China became the first major economy to grow since the start of the coronavirus pandemic. Its GDP data revealed that, in the latest quarter after the anti-virus lockdowns were lifted and factories and stores were re-opened, the Chinese economy recorded an unexpected expansion by a strong 3.2%.

This report restored hopes for a sharp V-shaped economic recovery and raised optimism around the market, boosting the risk appetite. The increased risk appetite then weighed on the safe-haven asset gold, and added further to the daily losses.

Daily Technical Levels

Support Resistance

1789.66 1811.61

1780.98 1824.88

1767.71 1833.56

Pivot point: 1802.93

The yellow metal gold is finding immediate support at the 1,795 level, and violation of this could extend the selling bias until the next support level of 1,790. Gold has recently violated the upward trendline on the four hourly charts, suggesting odds of a selling gold bias. On the higher side, gold could show bullish retracement to the 1,809 level resistance; above this, the next resistance is likely to be found at around the 1,814 level. Let’s consider staying bullish over 1,795 and bearish below the same. Good luck!