Gold: Bullish Bias Dominates Above $1,782 – All Eyes on US Retail Sales

• Gold: immediate support prevails at 1,780, which marks the intraday pivot point level.
• The continuous spread of the Delta variant of COVID-19 and political tension in Afghanistan boosts safe-haven appeal.
• Of late, infections in China and the US have been rising towards early 2021 levels.

During the Asian trading hours today, the price of the precious metal failed to stop its overnight downtrend, remaining subdued near the $1,755 level. The losses in gold prices occurred, even after the previously released downbeat Chinese economic data boosted the safe-haven demand in the market. Meanwhile, the continuous spread of the Delta variant of the coronavirus, and the upflare of political tension in Afghanistan, put an extra burden on the market trading sentiment. As a result, the S&P 500 Futures dropped from the all-time high to 4,466, which was down 0.17% intraday at the time of going to press.

Therefore, the risk-off market sentiment boosted the safe-haven US dollar and became one of the key factors that kept the gold price under pressure, due to its inverse relationship with the dollar. At the same time, the downbeat market sentiment may help limit deeper losses in the safe-haven metal, gold. The precious metal is trading at 1,787.28, and consolidating in the range between 1,784.49 and 1,788.77.

Covid Woes & Downbeat Economic Data

The market trading sentiment failed to halt its downbeat performance, remaining depressed as the fears of the fast-spreading Delta variant of the COVID-19 virus dampened global economic recovery. This is seen as a significant concern for the global markets, as witnessed after China released downbeat economic data, showing that industrial production and retail sales grew slower than expected in July.

China’s latest COVID-19 outbreak and freak weather put a hole in the recovery of the world’s second-largest economy. Meanwhile, the downbeat data from the US (the world’s largest economy) put some additional pressure on the market trading mood. As a result, the US 10-year Treasury yields stuck around the one week low of 1.258%, after declining for the last two days. The S&P 500 Futures dropped from an all-time high to 4,466, which was down by 0.17% intraday at the time  of going to press.

As per the latest COVID data, fears regarding the Delta variant are picking up, due to the more aggressive character that is moderately resistent to vaccines. In Australia, the number of infections remains high, close to the August 2020 levels of 500 new cases daily. In the meantime, infections in China and the US have also been rising, approaching the levels of early 2021.

Geopolitics & Indecision Over Central Bank Moves

In addition to this, another reason for the risk-off market trading sentiment could also be attributed to the ongoing unrest in Afghanistan, as the Taliban has re-entered Kabul. The unexpected destruction of Afghanistan is raising questions about the standing of the US in the eyes of its allies and enemies. Therefore, investors and analysts are currently discussing how the situation will impact the dollar and other assets over the coming years and decades.

Apart from this, the absence of a clear signal for future moves by the key central banks puts further pressure on the market trading sentiment. So, the risk-off market sentiment has boosted the demand for the safe-haven US dollar, and become the key factor that has kept the gold price under pressure, due to its inverse relationship with the dollar.

The US Dollar & the Impact on Gold

On the USD front, the broad-based US dollar maintained its upward rally of the previous day, drawing some further bids on the day, as downbeat economic data from China, the continuous spread of the COVID-19 Delta variant and political tension in Afghanistan all put negative pressure on the market risk mood, giving the safe-haven US currency a boost. As we are all well aware, US Federal Reserve Chairman Jerome Powell will address educators later in the day. However, it is broadly anticipated that he will not mention monetary policy at this meeting, but rather wait until the central bank’s Jackson Hole symposium.

Looking forward, the market traders will keep their eyes on the US Retail Sales for July, which are expected to come in at -0.2%, versus +0.6% prior. Meanwhile, the speech by Fed Chair Jerome Powell at an online town hall event will be crucial to watch. Apart from this, the headlines over the Sino-US tussle and the Taliban-Afghanistan matter will also be essential to watch.

Gold – XAU/USD – Technical Analysis – Upward Channel Supports at $1,782

On the technical side, the precious metal is trading with a solid bullish bias at the 1,791 level. On the higher side, gold is heading towards the next resistance level of 1,794, and a bullish breakout could push the price towards the 1,800 and 1,812 resistance levels.

On the lower side, gold is receiving immediate support at 1,780, which marks the intraday pivot point level. A breakout below this level could lead the gold price towards the 1,775 level. The leading indicators, like the RSI and the MACD, support a bullish trend. Therefore, investors should look for a buying trade over the 1,782 level today. Good luck!