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Gold with modest losses around $ 1,900 region amid stronger USD

  • A strong rebound in the demand for USD puts new pressure on the prices of gold, denominated in dollars.
  • A sell-off in the stock markets could offer some support to safe-haven gold and help limit losses.
  • The bears could wait for a sustained break below the 100-day SMA before opening aggressive positions.

The gold moves lower during the European session on Wednesday, trading near daily lows around the $ 1,900 level.

The precious metal has seen some new sales on Wednesday and has reversed the positive movement of the previous day, although it remains within a four-day range. It has been considered that a strong rebound in demand for the US dollar It has been a key factor that has put some pressure on the prices of gold, denominated in dollars.

The alarming growth in new coronavirus cases and the imposition of new lockdown restrictions they have fueled concerns that economic growth will weaken again. This, along with the uncertainty about the actual outcome of the elections Americans, has forced investors to undo their bearish positions in the USD.

Apart of this, the lack of progress in the US stimulus talks it has further affected market sentiment. This has been evident by a sharp drop in the stock markets. The flow of risk-off money has done little to revive demand for the safe-haven precious metal, although it could possibly help limit deeper losses.

Further, Increasing caution over the US presidential election could further help limit big moves and extend some support to the XAU / USD. This makes it prudent to wait for a strong continuation sell before positioning for any short-term bearish moves.

From a technical perspective, it is more likely that any significant drop below the $ 1,900 level will attract some buying near the 100-day SMA, currently near the $ 1,886-85 region, which if decisively broken will be seen as a new trigger for the bears and will trigger some technical selling.

There is no major economic data release on Wednesday. Therefore, the broader market risk sentiment, developments around the coronavirus saga, coupled with USD price dynamics, could generate some short-term trading opportunities.

Credits: Forex Street

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