- Gold drew new purchases near 50-DMA and rebounded to a one-month low.
- Concerns about worsening US-China relations have strengthened the product’s safe haven status.
- Sales after the ECB in USD benefited the dollar-denominated commodity and remained favorable.
Gold added to its intraday gains and refreshed daily highs around the $ 1,718 region at the start of the North American session.
The precious metal managed to attract bearish purchases near the 50-day SMA support around the $ 1,690 region and broke two consecutive days of losing streak. The yellow metal recovered part of the strong intraday decline of the previous day to almost a month low and was supported by a combination of factors.
Concerns about a further escalation of tensions between the two largest economies in the world have overshadowed recent optimism about a V-shaped global economic recovery. This, in turn, has led to a modest decline in global stock markets and stimulated demand for traditional safe havens, including gold.
Meanwhile, the last step in a sudden recovery in the past hour was led by an aggressive sale in US dollars, which tends to support demand for the dollar-denominated product. The greenback struggled to keep its early gains, but saw sales amid post-ECB purchases around the shared currency.
From a technical point of view, the commodity broke Wednesday below several weeks’ uptrend channel support near the $ 1,700 mark, but showed some resilience at lower levels. It is therefore prudent to wait for solid follow-up purchases before positioning yourself for any additional appreciation movement.
Market players are now beginning to reposition themselves for the Friday release of the monthly US employment report, known as NFP. Job details will play a key role in influencing short-term price dynamics in USD and help determine the next step in a directional movement of the product.