Gold remains depressed below $1,700 amid broad US dollar strength
- Gold stays on the back foot for the third day in a row.
- US dollar registers broad gains amid economy re-open hopes, risk-off.
- China's inflation figures could entertain Asian traders amid US-China jitters.
Gold prices remain on the back foot near $1,698 ahead of the Tokyo open on Tuesday. In doing so, the bullion remains pressured for the third day in a day. The reasons could be traced from the US dollar’s broad gains amid risk aversion as well as expectations of the economic restart.
While calls of economic re-open in major economic reignite optimism among traders, fears of the coronavirus (COVID-19) keeps the risk-off sentiment alive. The catalysts could be traced from the fresh increase in virus cases from Germany and the global epicenter Wuhan.
Also adding to the greenback’s strength could be the Fed policymakers’ efforts to placate traders after an indicator suggested negative interest rates for 2021. Though, fears of downbeat jobs report and economic challenges, due to the virus, couldn’t be ignored.
Further, US-China tension acts as an additional burden on the risk-tone sentiment. Recently, US President Donald Trump ruled out reopening phase 1 deal terms for renegotiations. The Republican leader has been alleging China for the pandemic off-late.
Following the catalysts, Wall Street registered mixed closing on Monday whereas S&P 500 Futures register mild gains around 2,925 by the press time.
Looking forward, China’s Consumer Price Index (CPI) and Producer Price Index (PPI) for April are likely to offer immediate direction to the bullion. However, trade/virus updates will have a higher impact on any surprise news.
Technical analysis
A falling trend line from April 14, currently around $1,722, holds the key to the bullion’s run-up towards April month top nearing $1,748. On the contrary, 21-day EMA near $1,692 offers immediate rest during the fresh declines ahead of highlighting a three-week-old support line near $1,678.