Gold is being given for the first time in July, and it is reversing from a three-week high.
Risk appetite is weighed down by covid troubles and central bank hesitation.
US Jobless Claims will be the focus of the ECB’s special meeting.
Risk appetite is deteriorating, putting downward pressure on gold (XAU/USD) prices in the early hours of Thursday. However, the yellow metal is down for the first time since June 29 with a 0.18 percent intraday loss of roughly $1,800.
The coronavirus (COVID-19) has lately moved outside of Asia-Pacific, with the UK reporting the highest daily covid cases since late January and the United States seeing a new variation, Epsilon, that is resistant to immunization, in California. In other parts of the world, South Korea has recorded all-time high instances, while Tokyo is considering extending the virus-related crisis until late August. In addition, according to ABC News, Australia’s Health Expert Catherine Bennett argues that many more Australians must be vaccinated before states and territories may contemplate removing lockdowns to prevent outbreaks.
In the midst of all of this, World Health Organization (WHO) official Mike Ryan warned of the ‘epidemiological folly’ of early Covid reopening, according to The Guardian.
In other news, the recent FOMC minutes highlighted the risk of inflation rising, while also dismissing the need to act quickly. “A new spike in coronavirus infections fueled by the more virulent Delta form could cause consumers to “draw back” and impede the US recovery,” Atlanta Federal Reserve President Raphael Bostic said after the minutes, according to Reuters.
Geopolitical tensions in the Middle East, as well as Sino-American squabbles, have weighed heavily on the market’s mood.
By press time, S&P 500 Futures had down 0.14 percent intraday, while US 10-year Treasury yields had fallen to 1.31 percent, the lowest level since late February.
Weekly US Jobless Claims may entice gold traders in the coming weeks, but officials at the European Central Bank (ECB) Special Meeting will be the focus of attention as they jockey for position on the inflation target. Risk catalysts, above all, are critical to keep an eye on for near-term direction.
With the recent dip, gold justifies the early week fails to cross the 200-day EMA. For the bears to retake control, a clean downside breach of the $1,798-95 horizontal level, which has been in place since late April, is required.
Following that, a horizontal from late March in the $1,756 area will be in focus.
Alternatively, a daily close above the 200-day EMA level of $1,808 will require confirmation from the lows around $1,809 on May 13 in order to target the May 10 peak of $1,845.
Overall, gold bulls appear to have worn out, and sellers may return if the current risk-off mentality persists.
More weakness is likely in the future.
Also check out: On a steady USD and a risk-off mentality, gold price forecast: XAU/USD teases $1,800./n
