- The widespread sales bias in USD has helped gold attract immersion purchases.
- The risk environment has capped the rise in the safe haven product.
- A sustained move above $ 1,748 is necessary to confirm a short-term upside bias.
Gold reversed an early dip in the $ 1,735 region and has now moved closer to the week highs set in the previous session.
The sense of global risk remained well supported by growing optimism about the global economic recovery. The same was evident from a positive trading sentiment around the stock markets, which put some pressure on the safe haven status of the precious metal.
However, the downward pressure prevailing on the US dollar helped limit any significant drop in the dollar-denominated product. The greenback has remained depressed following widespread protests in dozens of American cities following the death of George Floyd.
This comes against a background of deteriorating relations between the United States and China, which further cushioned the drop in product. In the latest development, China has suspended orders for US agricultural products, including soybeans, and has also canceled some orders for pork.
Despite the supporting factors, the yellow metal did not have a strong bullish conviction. Investors now seemed to be waiting for a new catalyst to determine the short-term trajectory of the commodity. This deserves some caution before placing aggressive directional bets.
Even from a technical point of view, the commodity must find a bullish acceptance above the recent resistance of daily close highs near the $ 1,748 level. Above the level mentioned, the bulls will probably aim to retest multi-year swing peaks, around the $ 1,765 area.