Gold prices struggle to find a clear direction amid conflicting signals, erasing weekly gains.
The Delta variation examines economic recovery, with Asia-Pacific taking the brunt of the blow.
Gold sellers are waiting for more indications as the DXY tracks the rise in US Treasury yields.
Sellers are optimistic due to a bearish candlestick below the crucial EMA confluence.
Gold (XAU/USD) is trading in a tight range over $1,800, at $1,802 in the European session on Friday. The previous day, commodities prices surged to their greatest level since June 17 before ending nearly unchanged, forming a bearish candlestick pattern to test the six-day rebound from June’s lows.
The safe-haven quality of gold and the increase in US Treasury yields, which placed a bid under the US dollar index, are driving the opposing trends (DXY).
To put it bluntly, the coronavirus (COVID-19) issues have returned to haunt market sentiment and put the economy’s recovery aspirations in jeopardy. The stakes are high since viral variations propagate quickly and are resistant to vaccinations.
While the US figures haven’t been as bad, covid infections in the UK have risen to January levels, as have pandemic numbers in South Korea, Indonesia, and Thailand. Furthermore, New South Wales (NSW) in Australia has become another state to bear the brunt of the virus’s miseries, signaling another another week of activity limitations.
Read more: Coronavirus Update: South Korea Sets New Highs in Infections, NSW Suggests Week-Long Lockdown
San Francisco Fed President Mary C. Daly recently remarked, according to the Financial Times (FT), that the Delta coronavirus strain and poor vaccination rates in some parts of the world represent a threat to global recovery, as she advised caution in eliminating monetary support for the US economy.
In other news, market mood is being weighed down by the increase in the US-China squabbles, which has been fueled by reports that more Chinese companies are removing themselves from US stock exchanges, according to Reuters. Furthermore, China’s weak inflation figures and the recent increase in US Jobless Claims support the risk-off mentality, which contributes to gold’s movement.
In the midst of these maneuvers, S&P 500 Futures print minor losses by press time, mirroring Wall Street’s losses, as US Treasury rates recover from the previous day’s lows in February. In addition, the US dollar index (DXY) reverses the previous day’s decline from early April highs.
Given the conflicting emotion that has emerged as a result of the global risk aversion wave, gold traders may want to wait for further clarity on the moves and focus on future covid updates in the interim. It should be highlighted that global policymakers’ acceptance of the covid troubles may indirectly encourage the demand for easy money, causing the US dollar to weaken, adding strength to gold’s upside.
Gold prices failed to cross a confluence of the 50-day and 100-day EMA on Thursday, creating a bearish candlestick on the daily chart despite a three-week high.
The resulting negative risk, however, needs to be confirmed, as the quote remains inside the $1,813 to $1,794 important area, which includes the EMA confluence and a horizontal line from June 23.
As a result, a daily close below $1,794 might boost bearish swings towards $1,760, with a target of $1,750 in late June.
A break above $1,813 to the upside, on the other hand, will immediately challenge the early May swing highs near $1,845. After that, the June 04 lows near $1,855 may put gold purchasers to the test.
More weakness is likely in the future./n
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