Good morning traders, 

The yellow metal gold prices were closed at 1929.07 after placing a high of 1961.82 and a low of 1923.84. Overall the movement of gold remained bearish throughout the day.  GOLD prices reduced on Monday amid the increased market risk sentiment over the optimism related to a COVID-19 treatment that lifted Wall Street stocks to a record high and ultimately weighed on gold. Gold prices rose for about 1% on the day but failed to remain there and started to fell because of improved risk appetite and then fell by 0.5% to the low of 1923.

Gold prices were only following the stock indexes on Monday as they were at a record high, in the absence of any macroeconomic data. Gold now needs a bigger catalyst to reverse its direction like additional stimulus measures or high inflation.

The NASDAQ and S&P500 rose and hit their record highs after the US Food and Drug Administration (FDA) provided emergency authorization to the use of blood plasma of recovered patients to treat COVID-19 patients.

The antibody-rich blood plasma from the people who have recovered from the virus is used to treat coronavirus patients. This technique has already been applied to almost 70,000 Americans in trials or for the gravely ill people.  The FDA said that although more trials needed to prove effectiveness, initial trials have indicated this method as safe.

The announcement of approving this treatment by FDA came a day after US President Donald Trump accused the FDA of delaying the rollout of vaccines and therapeutics for political reasons. The announcement by FDA came on the eve of the Republican National Convention, where President Donald Trump will launch his campaign to win a second term in the White House.

The procedure is described as a powerful therapy by the US president himself, and he has appealed the Americans to come forward to donate blood plasma if they had recovered from COVID-19.

According to Johns Hopkins University, almost 176,000 people have died in the United States from this deadly virus since the start of the outbreak. The confirmed cases from the US have reached about 5.7M figure. It shows that the US has had more confirmed cases and deaths than anywhere else in the world.

Some early research has suggested that blood plasma can decrease mortality and improve the health of the patient. However, it was only effective if this treatment was administered within the first three days of admittance to the hospital. There is still a need for more trials to prove the effectiveness of this treatment; however, the FDA has given the treatment “emergency use authorization” instead of giving full approval.

It should be noticed that the FDA had already approved the use of blood plasma transfusions on coronavirus patients but under certain conditions. US President Donald Trump said that the plasma treatment for coronavirus had proven to reduce mortality by 35%.

This news raised the risk sentiment, and stocks in the equity market moved towards high levels and weighed on yellow meal prices on Monday. There was no macro-economic data and news about the next stimulus package, which left the gold prices with the mercy of market sentiment.

However, the lingering US-China tensions and the possible rise in inflation due to the massive stimulus measures introduced by central banks worldwide to alleviate the economic damage caused by pandemic has remained supportive of gold and kept the losses in bullion limited on Monday.

Daily Technical Levels:

Support Resistance

1921.20 1960.65

1906.30 1985.20

1881.75 2000.10

Pivot point: 1945.75

Gold prices continue to follow the same technical outlook. Gold is trading at 1,933 level and continues to trade sideways with on descending triangle pattern that provides support at $1,924 and resistance at $1,947. Closing of candles below 1,924 level can drive selling bias in the market until 1,911 and 1,888 level. While bullish breakout of 1,942 level can extend the buying trend until 1,953 level. Good luck!