During Tuesday’s Asian trading session, the price for the precious metal managed to extend its upward rally of the previous-day, remaining well bid above the $1,810 level on the day, as the prevalent downbeat market sentiment, triggered by multiple factors, tends to underpin the safe-haven assets, including GOLD. However, the market trading sentiment was under pressure from the long-lasting concerns over new COVID-19 outbreaks, as countries including Australia and South Korea reimposed restrictive measures, which resulted in escalated doubts over global economic recovery and clouded the market trading sentiment.

Moreover, the upticks in gold got some additional lift due to the bearish US dollar. The greenback declined ahead of US inflation data, which could indicate when asset tapering by the US Federal Reserve is expected to start. On a different page, the optimism over the push by western policymakers to lift activity restrictions, even though the coronavirus (COVID-19) situation remain grim, keeps challenging the market’s risk-off mood. This was seen as one of the critical factors that capped further gains in gold prices. Meanwhile, the previously released better-than-expected trade data from China failed to leave any meaningful impact on the market trading sentiment. Currently gold is trading at 1,808.69, and consolidating in the range between 1,806.19 and 1,812.85.

Despite the trade data from China, which was better than expected, and the optimism over the Fed’s sustained support of easy money policies, the market trading sentiment failed to stop its sluggish early-day performance, remaining subdued on the day, as the worsening coronavirus (COVID-19) conditions in Australia and South Korea raised doubts over economic recovery across the globe. This was seen as one of the key factors that kept the market trading sentiment under pressure. As per the latest report, Australia recorded a ten-month high in the number of infections yesterday, and rejected plans to unlock major areas, like New South Wales and Queensland. On this note, Australian Prime Minister Scott Morrison announced another local relief package to businesses, the details of which were released late on Tuesday.

In the meantime, the Director-General of the World Health Organization, Tedros Adhanom Ghebreyesus, has issued a warning about the spreading of the Delta variant. He said that this mutation of the coronavirus was fast becoming dominant, with many countries struggling with vaccine shortages. Therefore, the bearish appearance of the US stocks futures tends to highlight the risk-off sentiment, which leads to upticks in the safe-haven metal, gold.

Efforts by policymakers in the west, to lift corona-related restrictions, together with the Fed’s continued support of easy money policies, as we saw recently after a statement by New York Federal Reserve President John Williams, keep challenging the market risk-off mood. This was seen as one of the key factors that helped to limit deeper losses in the market trading sentiment. In the meantime, the upbeat Chinese trade numbers also played a major role in supporting the market trading sentiment. On the data front, China reported a 31.7% growth in Exports, Yuan terms, during the first half of 2021 (H1 2021). Moreover, “Imports rose 43.9%, accordng to a statement by customs spokesperson Li Kuiwen at a news conference in Beijing. Meanwhile, June’s Trade Balance rose to $51.5B, against the forecast of $44.2B and the previous $45.53B.

Looking forward, the market traders will keep their eyes on the producer price index for June, which is due later in the day, along with Fed Chair Powell’s testimony.