Gold Price Analysis: XAU/USD searches for clues to extend recovery moves beyond $1,950
- Gold prices struggle to keep the previous day’s pause to two-day losing streak.
- Risk-on sentiment continues even as traders await China data dump.
- No-deal Brexit fears gain momentum after Tories squash attempt to block the Internal Market Bill.
- US eases travel advisory concerning China, Hong Kong.
Gold seesaws around $1,957 during the pre-Tokyo open trading on Tuesday. The yellow metal snapped two-day declines the previous day amid market optimism. However, the bullion traders turn cautious ahead of the key China data since the start of Asian market hours. The reason could also be traced from the fears of no-deal Brexit and fading hopes of the coronavirus (COVID-19) vaccine.
Cautious optimism probes gold buyers…
With the US challenging the AstraZeneca’s decision to restart the COVID-19 vaccine trials, the market’s risk-on moves catch a breather as American regulators fear serious side effects.
Also questioning the market mood could be the news that the UK’s House of Commons turned down the opposition Labour Party’s push to block the Internal Market Bill (IMB) in a move to avoid hard Brexit. The bill gets harsh criticism from the European Union (EU) and some of the Tory backbenchers but manages to stay on the table due to the Conservative majority in the House.
On the contrary, news that US State Department eases travel warnings against China and Hong Kong pleased the risk-takers. Further, the Washington Post’s update suggesting the US blocks Chinese goods made with forced labor also questions the risk-on mood.
Amid all these plays, S&P 500 Futures rise 0.25% to 3,376 after Wall Street benchmarks gained over 1.0% each during Monday’s trading.
Moving on, traders will keep eyes on China’s Industrial Production and Retail Sales data for August. Forecasts suggest the key economics recover from -1.1% and +4.8% to 0.0% and +5.1% respectively on the YoY basis. However, fears of disappointment can’t be ruled out as the second wave of the virus has already hit major economies except for Beijing.
Should the scheduled data prints downbeat readings, the trading sentiment may get another reason to recall the US dollar buyers, which in turn will negatively affect the gold prices.
Technical analysis
Unless breaking below the 50-day EMA level near $1,913, a falling trend line from August 18, at $1,968 now, lures the bulls.
Reprinted from FXStreet，the copyright all reserved by the original author.
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