Daily Brief, Sept 11 – Everything You Need to Know About Gold Today!
Arslan Butt • 3 min read
Happy Friday traders,
The precious metal GOLD prices closed at 1,945.95, after placing a high of 1,966.44 and a low of 1,941.33. Overall, the movement of gold remained flat throughout the day. On Thursday, in an earlier trading session, gold prices surged to almost 1,966, the highest level in six days, on the back of the volatile dollar, which was weak against the euro after comments by the President of the European Central Bank , Christine Lagarde, that were hawkish for the single currency.
In an online summit of the Association of Southeast Asian Nations (ASEAN) on Thursday, US Secretary of State Mike Pompeo urged top diplomats from Southeast Asia to cut ties with Chinese companies helping to build islands in the South China Sea. A week before, the US Trump administration blacklisted two dozen firms working in the disputed waters.
He said that regional governments should reconsider business dealings with exactly those state-owned companies that are bullying ASEAN coastal states in the South China Sea. However, Chinese Foreign Minister Wang Yi said that the US was behind the tensions in the South China Sea, as Washington was driving the militarization.
Furthermore, China and the United States traded attacks about who has a better understanding of the freedom of the press. US Secretary of State Mike Pompeo criticized the official newspaper of China’s ruling Communist Party for refusing to carry an op-ed by the US ambassador.
Both sides tossed a rapid rally of strong-worded comments back and forth, resulting in a deterioration of relations between the world’s two largest economies, ahead of the US Presidential election in November. The arguments were related to trade, human rights and the COVID-19 pandemic.
This war of words has raised fears of further escalation in the US-China tensions and is supporting the risk-off market sentiment, driving gold prices in the upward direction. On the coronavirus front, the daily number of new coronavirus cases increased in Greece, France and Palestine. The UAE reported five times the daily number of new cases than a month ago and warned residents and citizens to abide by the anti-corona measures.
India reported a record of 95,735 cases daily, and the Indonesian capital went back into lockdown, to contain an escalating outbreak that is pushing hospitals to the brink of collapse. The total number of global coronavirus cases has surged above 27.9M, and the death toll has reached a whopping 905,000. The number of people who have recovered worldwide is reported as 18.8M.
Israel is also considering whether it should impose a nationwide lockdown, as the country is struggling with a steep rise in coronavirus infections.
The increasing number of coronavirus cases worldwide and the renewed lockdown measures and restrictions weighed on the market sentiment and supported the rise in gold prices on Thursday.
After surging to the highest level in six days, the gold prices started declining, once again reaching the same level on which they started the day, resulting in a flat movement for the day on Thursday. The drop in prices was caused by the latest positive news regarding the coronavirus vaccine from China.
Beijing has approved trials for its first nasal spray vaccine, to combat the novel coronavirus that has claimed over 904,000 lives and infected more than 27.9 M people globally. China is expected to start its Phase 1 clinical trials on its only nasal spray vaccine in November, with 100 volunteers.
Daily Technical Levels
Pivot Point: 1,959.00
The yellow metal GOLD has violated the triple bottom support level of 1,942, and it continues to trade below this level. Gold may find immediate support at the 1,937 level, and a bearish breakout at this level could extend the selling bias until 1,921. Conversely, the bullish crossover at the 1,942 level could drive the buying trend until the 1,950 level, and above this, the next target is likely to be the 1,965 level. Let’s wait for the US Inflation data to drive the further trend in gold. Good luck!