Good morning, traders.

Gold prices closed at $1761.84 after placing a high of $1779.48 and a low of $1760.82. Overall the movement remained bearish throughout the day. After posting gains for three consecutive days, GOLD paused its advance towards eight-year highs on Wednesday amid an unexpected rally in the US dollar. Despite the risk-off market sentiment, the US dollar’s strength weighed on the safe haven after new COVID-19 worries and a grim world economic forecast from the International Monetary Fund (IMF).

During the early Asian trading session, gold prices surged to the highest level in around eight years. Hopes of more stimulus measures from governments worldwide due to rapidly increasing coronavirus cases increased the demand for the yellow metal. In the week ended June 21, the US’s infections rose by 25% compared to a week earlier. This raised fears of the second wave of coronavirus and its impact on the economy and helped safe haven assets garner demand in the market.

Meanwhile, US Treasury Secretary Steven Mnuchin stated on Tuesday that the next stimulus bill would focus majorly on getting people back to work rapidly. This also exerted a positive impact on gold prices, which led to the rise of gold towards multi-year highs, around $1800 per ounce. However, gold was doing well in the risk-off market sentiment until the US dollar came back into favor. The Dollar Index, which measures the US dollar value against the basket of six currencies, rose 0.6% to 97.14 and weighed on gold prices.

Gold, which was up near $1779 on Wednesday, started to drop at the same pace and settled down $19 at $1760 per ounce during the late trading session. The risk appetite fell across the market on Wednesday, as more than half of the US states reported a rise in the number of cases of coronavirus. The new cases that appeared with a high rate also broke daily records and raised fears that new measures will be taken to contain the spread. These fears undo the recent progress made on the reopening of the economies.

Meanwhile, the IMF lowered its global growth forecast for this year and the next due to coronavirus pandemic, which exerted negative pressure on gold prices on Wednesday. IMF reduced the global growth forecast to -4.9% in 2020, which is substantially worse than its forecast only ten weeks ago in April. The UK economy’s contraction was predicted at more than 10% this year, followed by a partial recovery in 2021.

The managing director of IMF, Kristalina Georgieva, also warned that the April forecast was overtaken by events and the likely path of the global economy was looking worse. The previous forecast in April by IMF was a 6.5% decline in the UK economy and a 3% decline in the global economy. A grim outlook for the world’s economic growth by the IMF weighed heavily on the precious metal, which reversed its direction on Wednesday and pulled prices below $1761 level.

Furthermore, the HPI for the month of April from the United States also reported losses after it released as 0.2% against 0.3% forecast and weighed on the US dollar, which limited the fall of gold prices a bit.

Daily Technical Levels
Support Resistance
1758.64 1790.39
1745.62 1809.12
1726.89 1822.14
Pivot Point: 1777.37

Gold is trading at 1,762 level, holding right above a next support level of 1,760. Above this, the precious metal can lead prices towards 1,773 and 1,778 while support continues to hold around 1,760 and 1,753.

Good luck for today!