Good morning traders,

 GOLD prices closed at 1,911.50, after placing a high of 2,029.96 and a low of 1,901.24. Overall the movement of the precious metal remained strongly bearish throughout the day. Gold recorded its biggest single-day loss since 2013 on Tuesday, as investors diverted their cash to risk assets. A drop of more than 5% in gold prices, to around 1,900 per ounce, was seen in a single day.

The return of the risk appetite, after the encouraging economic numbers and hopes of new coronavirus relief packages, helped boost the equity market. The risk sentiment was encouraged by the early morning headlines of a potential Russian vaccine, which drove continuous optimism in the stock market.

On Tuesday, Russia became the first country in the world to approve a vaccine for the coronavirus. President of Russia, Vladimir V. Putin, announced in a cabinet meeting that the vaccine was effective enough, and that his daughter had taken it. However, the global health authorities said that the final stage, critical clinical trials of the vaccine, to determine its safety and effectiveness, had yet to be completed

In a congratulatory message to the nation, Mr. Putin thanked the scientists who developed the vaccine for “the first” very important step for Russia, and generally for the whole world. The Equity markets rushed to the upside after this news, as risk appetite increased, and this ultimately caused the price of the safe-haven metal to drop, posting its biggest decline in seven years.

However, scientists in Russia and other countries are alarmed. They say that rushing to offer the vaccine before final-stage testing could backfire.

The final-stage trials involve tens of thousands of people. It could take months to complete these critical trials, but it is the only way to check the safety and efficacy of an experimental vaccine.

The S&P 500 rose to its highest level, on a par with February 2019; the US dollar fell from the one-week highs, and gold prices dived, as the expectations of a US stimulus package increased, raising the risk appetite.

On the data front, the NFIB Small Business Index dropped to 98.8 points, from the anticipated 100.7 points, weighing on the US dollar. At 17:30 GMT, the Core PPI for July rose to 0.5%, from the projected 0.1%, lending support to the US dollar. For July, the US PPI also rose to 0.6%, from the projected 0.3%, favoring the US dollar, and at the same time exerting pressure on gold prices and adding to its losses on Tuesday.

Apart from this, traders also cheered President Trump’s announcement that he was seriously considering a capital gains tax. This also raised the risk sentiment and added further pressure to safe-haven gold prices.

Daily Technical Levels

Support Resistance

1,877.16 1,995.31

1,835.23 2,071.53

1,759.01 2,113.46

Pivot point: 1,953.38

Gold prices have plummeted – prices fell dramatically, from the 2,050’s level to 1,883, as traders did some profit-taking in gold. The yellow metal has completed a 61.8% Fibonacci retracement at the 1,879 level, but the bearish bias still seems dominant. On the lower side, the upward trendline is supporting gold at the 1,860 level. Odds of bullish reversal seem strong over 1,860, and could push gold prices even higher, to around 1,940. A bearish breakout of 1,860 could extend selling until 1,833. Good luck!