Upward Trendline Underpins Gold at $1,774 – Quick Daily Outlook

During Thursday’s Asian trading session, the gold price failed to stop its previous-day downward rally and remained under pressure near the $1,780 level. The losses in the GOLD prices appeared after the US dollar held higher ground amid talk of double booster shots against the coronavirus.

The recently released minutes of the July Fed meeting reported that officials discussed tapering plans before the end of this year, which instantly boosted the sentiment surrounding the US dollar.

Meanwhile, the ever-increasing fears over the spread of the COVID-19 Delta variant are weighing on the market mood. Thus, the risk-off market sentiment boosted the demand for 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.

In contrast, the overall market risk-off mood could help gold prices in the wake of the safe-haven demand. Gold is trading at 1,779.12, and consolidating in the range between 1,774.70 and 1,788.93.

The market trading sentiment failed to stop its extended downward performance and remained depressed on Thursday, as escalating Delta variant concerns raised doubts over global economic recovery. Virus cases in Australia have climbed to a fresh high since August 2020, pushing New South Wales (NSW) to extend the local lockdowns until late August.

In addition to this, New Zealand’s daily COVID infection rate rose from one to 10 on Tuesday. Meanwhile, the United States is leading the world in reported COVID-19 cases and deaths. As per the latest figures, the daily number of new cases in the USA rose from fewer than 10,000 in early July to more than 150,000 in August, as the Delta variant took hold.

As a result, the 10-year US Treasury Yields dropped by 1.1 basis points (bps), to 1.26%, while the S&P 500 Futures dropped by 0.05%, to mark the third daily fall.

Apart from the worsening coronavirus conditions, the July Federal Open Market Committee (FOMC) Minutes also pressured the market trading sentiment. The FOMC minutes dampened the rate hike concerns, despite supporting the tapering, whilst raising concerns among the policymakers, regarding the recovery of the US employment market. However, the downbeat mood underpinned the US dollar, due to its safe-haven appeal, which in turn pushed the US Dollar Index (DXY) towards the yearly top, with an intraday increase of 0. 26%, to 93.40.

On the USD front, the broad-based US dollar maintained its upward rally of the previous-day, hitting a nine-month high against the euro and the Australian and New Zealand currencies on Thursday, as the market risk-off mood tends to underpin the greenback, due to its safe-haven allure. Meanwhile, the recently released minutes of the July Fed meeting reported that the officials discussed tapering plans before the end of this year, which added to the optimism, resulting in gains for the US dollar.

Looking forward, market traders will keep their eyes on the Fed’s Jackson Hole symposium, which is due to take place from Aug 26 to 28. Investor speculation about Fed asset tapering will determine the price action in gold over the next couple of days. In the meantime, the headlines over the coronavirus and the Taliban-Afghanistan matter will be key to watch.