- Resurgent demand for the US dollar sparked further gold sales on Thursday.
- The USD remained high after the release of the optimistic US Q3 GDP report.
- The US economy expanded at an annualized rate of 33.1% compared to the 31% expected.
The gold it extended its sharp intraday slide during the early North American session and was seen hovering near the month-long lows, around the $ 1,865-67 region after US GDP.
The precious metal was unable to capitalize on its initial rally, instead finding new offers near the $ 1,885 region and slipping into negative territory for the second consecutive session on Thursday. The drop was solely sponsored by a sudden spike in demand for US dollars, which tends to undermine demand for dollar-denominated commodities, including gold.
Despite uncertainty about the actual outcome of the US presidential election next week, the dollar maintained its status as a global reserve currency amid concerns about the possible economic impact of growing coronavirus cases. The dollar was also supported by Thursday’s stronger-than-expected US GDP report for the third quarter.
According to the advance estimate, released by the US Bureau of Economic Analysis on Thursday, the US economy expanded at an annualized rate of 33.1% during the third quarter of 2020. This marks a reversal from the quarter. previous, which marked a contraction of 31.4% caused by the coronavirus, and also improves market forecasts, which expected a growth of 31%
Aside from widespread USD strength, a modest rally in US equity futures further detracted demand for the precious metal’s safe-haven and contributed to the intraday slide. Given the overnight drop below the 100-day SMA for the first time since March, the emergence of some new selling on Thursday favors bearish traders and supports prospects for further weakness.
Credits: Forex Street