Gold remains under pressure around $1,551 as US dollar keeps the gains
- Gold drops for the second day in a row as broad US dollar strength hurt the bullion buyers.
- Trade sentiment recovers despite fears of China’s coronavirus outbreak, trade-negative headlines.
- Updates from US President Trump’s impeachment hearings, second-tier US data and China will be the key.
Gold bounces off the intra-day low of $1,550.40, flashed a few minutes back, to $1,551.30 by the press time of the pre-European session on Wednesday. In doing so, the safe-haven ignores the geopolitical risks emanating from China and the uncertainty surrounding the US-China trade relations. The reason could be found in the US dollar strength that has a negative correlation with the yellow metal.
China’s outbreak of coronavirus took nine lives by the end of Tuesday, as confirmed by the China National Health Commission (NHC). The same renews fears of the return of the Severe Acute Respiratory Syndrome (SARS) virus that resulted in 774 deaths in 2002/03. The NHC said it will take strict monitoring measures over the Wuhan city that is known to be the epicenter of the virus.
On the trade front, China’s Vice Premier Han Zheng earlier poured cold water on US President Donald Trump’s comments that the trade deal with China will get $100 billion worth of orders. Following that, Ning Jizhe, Vice Chairman of the National Development and Reform Commission (NDRC), said that the US and China haven’t set a timetable for the next phase of their trade negotiations.
Also affecting the risk tone was the beginning of the impeachment hearings for US President Trump whereas in the Republicans have blocked the Democratic move to subpoena the state department documents. Furthermore, global leaders including US President Trump and the United Nations’ (UN) Secretary-General Antonio Guterres are pushing hard to get the Libyan oil route resumed. However, Khalifa Haftar is still unbent and can renew chaos in the Middle East.
Even so, the US 10-year Treasury yields recover to 1.79% whereas equities in China and India mark losses.
Moving on, trade/political and update concerning the coronavirus will keep the global headlines equipped while the US second-tier data concerning housing and manufacturing can offer additional directives to the bullion traders.
The precious metal portrayed a bearish spinning top on Tuesday, which in turn favors its further declines to a 21-day SMA level of 1,542.55. Alternatively, a daily closing beyond Tuesday’s high near $1,569 will defy the bearish candlestick formation.