Good morning, traders,
Gold prices closed at $ 1,970, after placing a high of 1,980.83 and a low of 1,941.34. Overall the movement of gold remained bullish throughout the day.
Gold futures rose once again, posting gains for a ninth straight day on Wednesday, after the Federal Reserve reiterated plans to keep rates unchanged until the economy improves further.
Gold prices gained in volatile trading on Wednesday, and remained near the previous session’s high levels, after the US Federal Reserve vowed to keep interest rates near zero, amid the rapid rise in coronavirus cases – this has dampened hopes for an economic recovery.
After the two-day policy meeting of the US Federal Reserve on Wednesday, Fed Chair Jerome Powell’s press conference caused a surge in gold prices, to the previous days’ peak level at 1,980. Gold prices changed sharply during Powell’s speech, as he remained careful and neutral, which showed a developing plurality of investors’ viewpoints at current levels in the market.
Powell said that the current economic downturn was severe, and continued fiscal and monetary support will be necessary for recovery. He added that the Fed would remain committed to using the full range of tools available to support the economy and keep the interest rates near zero for as long as it takes for the economy to recover.
Gold has risen almost 30% this year, due to massive stimulus packages to aid the economies around the world, which have been affected by the pandemic and a low-interest-rate environment.
On the data front, the US Goods Trade Balance for the month of June was released at 17:30 GMT, coming in at -70.6B, against the expectations of -74.5B. This gave the US dollar a boost. The Prelim Wholesale Inventories came in at -2.0%, compared to the expected -0.4% in June, and this also lent support to the US dollar.
At 19:00 GMT, the Pending Home Sales in June increased to 16.6%, compared to the projected 15.6%. lending support to the US dollar.
The better-than-expected data from the US gave strength to the US dollar and kept a lid on additional gains in gold prices on Wednesday.
Meanwhile, President Trump said that his administration was considering banning the Chinese-owned social media giant TikTok, amid fears that it could be weaponized to spy on Americans.
US Treasury Secretary Steven Mnuchin also said that the Committee on Foreign Investment in the US was reviewing the app’s national security risk. He added that TikTok was under serious review, and that his committee will make a recommendation to the president this week.
On the coronavirus front, the US COVID19 death toll has surpassed 150,000, as seven states, including California and Florida, have smashed new daily fatality records. Due to the rapid spread of the virus in the US, fears for the potential spread of infections in the Midwest area, including Indiana, Colorado, Ohio and Wisconsin, increased.
The ongoing US-China tensions and the increasing number of coronavirus cases, and the resulting deaths, also helped gold to post gains for the ninth consecutive day on Wednesday.
Daily Technical Levels
Pivot point: 1956.48
Gold soared sharply, to place a new high at around the 1,988 level, then it dropped suddenly immediately thereafter. It is now trading at 1,936. Gold may find immediate support at the 1,959 level now, and a bearish crossover below this level could lead its prices towards the 1,945 mark. While immediate resistance remains at 1,971 and above, 1,981 will extend major resistance. The bullish bias seems dominant, above the 1,957 level. Good luck!