Good morning traders,
The GOLD prices closed at 1,941.58, after placing a high of 1,962.15 and a low of 1,932.04. Overall, the movement of gold remained bearish throughout the day. Gold prices fell on Friday, posting weekly losses for the first time in 9 weeks, on the back of higher US Treasury Yields. The Benchmark US 10-year yields, rose to 0.71% on Friday, making the US dollar stronger, eventually weighing on the yellow metal. Higher yields increase the opportunity cost of holding non-yielding assets, such as precious metals.
Traders were cautiously awaiting any news related to the next US Stimulus package and the US-China trade talks on August 15.
On Friday, US President Donald Trump stressed the importance of the coronavirus aid relief package, after the US Congress failed to come to any agreement on the package, which would boost the US economy and healthcare system. Trump pushed for more direct payments and small business loans, including state and local government aid, and assistance with rental payments.
On the US-China front, the United States and China have delayed a review of their Phase 1 trade deal, which was initially scheduled for Saturday. This came in to allow the Chinese time for more purchases of US exports. The meeting was supposed to be held on Saturday, on the six-month anniversary of the trade deal. The deal entered into force on February 15, as the coronavirus pandemic began spreading globally.
On Friday, US President Donald Trump said that the trade deal was intact and going very well, but he refrained from commenting on the delay in the review meeting. According to some sources familiar with the plans, the US wanted to give China more time to increase purchases of US farm products, as agreed in the deal. It is believed that America granted this favor to China, in order to increase the political optics of the review, as the US Presidential elections were drawing near.
On the negative side, at a news conference on August 15, when asked whether there were other Chinese-owned companies, such as Alibaba, that Trump was considering banning, the president replied in the affirmative, saying that he was looking at other possible bans.
Meanwhile, the Chinese Vice-Foreign Minister, Zheng Zeguang, urged that efforts should be made to maintain and stabilize bilateral ties between the US and China, as relations were at a critical juncture. Due to the uncertain signals coming from the market, traders remained cautious about placing strong positions, and as a result, gold remained under pressure on the last day of the week.
On the data front, the macroeconomic data released in the US on Friday also gave mixed signals and failed to provide any meaningful trend for gold prices. At 17:30 GMT, the Core Retail Sales for July rose to 1.9% from the projected 1.3%, lending support to the US dollar. The Retail Sales for July dropped to 1.2%, from the expected 2.0%, weighing on the US dollar.
Both reports were crucial for the day, but as the two figures came in against each other, they failed to provide any significant movement to either the US dollar or the yellow metal.
On the vaccine front, the head of the sovereign wealth fund said that Russia had reached an agreement, in principle, for clinical trials of its controversial coronavirus vaccine to be conducted in Saudi Arabia and the United Arab Emirates. This raised the risk sentiment in the market, weighing on safe-haven gold prices on Friday.
Daily Technical Levels
Pivot point: 1,956.07
The precious metal GOLD continues to consolidate over a support level of 1,930 level and closing of candles above this level may extend bullish bias until 1,958. While breakout of 1,930 can trigger selling until next support level of $1,920. Choppy sessions can be expected today.