Gold Price Analysis: XAU/USD retraces biggest losses in seven years above $1,900
|- Gold prices carry bounce off $1,901.52, the lowest in two weeks.
- US dollar gains, mixed sentiment triggered the bullion’s biggest daily slump since April 2013.
- Risk catalysts to keep the driver’s seat ahead of the US CPI data.
Gold picks up the bids near $1,926.70 during the pre-Tokyo Asian session on Wednesday. The bullion dropped by around $120 the previous day, marking the biggest drop since late-April 2013, amid market’s rush to the US dollar. Though, the recent risk reset seems to have favored the pullback moves.
Consolidation or a trend change?
Although challenges to the US-China relations and uncertainty surrounding the American stimulus stay on the table, the market’s profit booking from gold’s magnanimous surge is less likely to defy the bulls unless any positive headlines.
Recently, Fox Business News (FBN) cited the US House Republican Leader Mitch McConnell to suggest no coronavirus (COVID-19) relief talks by the policymakers could be undertaken on Tuesday. On the other hand, the White House Adviser Larry Kudlow’s statement that China is fulfilling trade obligations can’t justify the Trump administration’s executive orders sanctioning officials from Beijing and the moves to term goods from Hong Kong as “Made in China”. It should also be noted US President Donald Trump also said that phase one deal with China means “very little” to him. Further, the Republican leader’s rhetoric to rekindle vaccine hopes also fails to convince the market optimists.
The reason could be traced from the fresh coronavirus (COVID-19) case in New Zealand and a sustained, but the recently slow, rise in the news cases in Australia and the US.
Against this backdrop, S&P 500 Futures follow Wall Street’s footsteps while declining to 3,333, down 0.07% on a day.
Looking forward, traders will keep eyes on the risk catalysts wherein the US stimulus talks and Sino-American news may join virus updates to occupy the front rows. Additionally, the US Consumer Price Index (CPI) for July, expected to rise from 0.6% to 0.8% on YoY, will also be the key to watch.
Technical analysis
An ascending trend line from March, at $1,867 now, restricts the yellow metal’s downside past-$1,900 nearby support. However, the bulls are less likely to regain controls unless the quote rises past-$2,000 mark.
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