Good morning, fellas,

On Wednesday, the precious metal managed to stop its declining streak of the previous day, drawing modest bids around the $1,815 level, as the COVID woes escalated further in the US, China and Australia. The US Centres for Disease Control and Prevention (CDC) issued a temporary halt on residential evictions until October 03, after recording the biggest jump in infections in February.

Besides the coronavirus concerns, the long-lasting geopolitical tussles between the Western allies, Iran and China, keep weighing on the market trading mood. This was seen as one of the key factors that is keeping the GOLD prices higher. Besides this, the bearish bias of the US dollar, triggered by multiple factors, was seen as another key issue that provided additional support to the dollar-denominated commodity, gold.

On the flipside, the previously released upbeat Chinese data raised hopes over economic recovery, which may help the market trading sentiment, resulting in the earlier losses being recouped. Currently, the gold price is trading at 1,814.09, and consolidating in the range between 1,809.05 and 1,814.90

Mounting Covid Fears & Geopolitical Tussles Underpin Gold Over $1,807

Despite the upbeat economic data from the US and China, the market trading sentiment failed to extend its positive performance of the previous day, turning sour as the concerns about the increasing numbers of COVID-19 cases in the US, China and Australia keep weighing on the market trading sentiment. Meanwhile, China has also recorded higher COVID numbers – 96 compared to 90 – while New South Wales (NSW), Australia, has failed to maintain the previous two-day fall in the virus figures, with the latest figure at 233.

In addition to this, the geopolitical tension between the West, and Iran and China, put some additional burden on the market trading mood. Furthermore, the long-standing impasse in the senate, over US President Joe Biden’s $1.0 trillion infrastructure spending plan, and rising uncertainty over the Fed’s next moves, have also played a significant role in undermining the market trading mood. However, the negative appearance of the US stocks futures highlights the risk-off sentiment, which benefits the dollar-denominated commodity, gold.

Weaker US Dollar Supports the Precious Metal, Gold

Despite the risk-off market sentiment, the broad-based US dollar failed to extend its positive performance, dropping on the day as traders awaited US jobs data, for some indication of the rates outlook.

Meanwhile, the uncertainty over the Fed’s next moves is also keeping the dollar under pressure. Therefore, the declines in the US dollar were seen as one of the critical factors that helped the gold prices to stay bid, as the price of gold is inversely related to the price of the US dollar.

Moving on, the market traders will keep their eyes on the ADP non-farm employment change for July, alongside the Markit composite manufacturing purchasing managers’ index (PMI), the services PMI and the Institute of Supply Management (ISM) Non-Manufacturing PMI, which are due later in the day.

Gold -XAU/USD – Daily Support and Resistance

Gold -XAU/USD – Technical Analysis – Ascending Trendline Provides Support at $1,807