Gold price is under selling pressure for the second day as investors dump safe-haven assets and jump in for opportunities in risky assets. The rally in global equities accelerates today despite the dismal economic data from the USA and Europe. On the financial data, the United States ISM Non-Manufacturing PMI came in at 45.4 beating the expectations of 44 in May. The ISM Non-Manufacturing New Orders Index registered in at 41.9, topping the expectations of 18.5. The ISM Non-Manufacturing Prices Paid also came in at 55.6, beating the expectations of 52.5. On the other hand, ISM Non-Manufacturing Employment Index came in at 31.8, below the expectations of 35.8.
Violent protests in the USA and falling US dollar capping the losses in gold. Investors also expect that the ECB will provide more stimulus of up to 500 billion to support the battered European economy.
Reports from India that the country’s gold imports contracted for the fifth straight month in a row, falling by about 30% also weigh on gold prices. India is the largest importer of gold, as the precious metal absorbed in the jewellery industry. In volume terms, India imports 800-900 tones of gold annually. The import of the yellow precious metal stood at USD 3.97 billion in April 2019. The precious metal imports had been recording negative growth since December last year.
Gold price is 1.83% lower at 1,693, making fresh three week lows and testing the 50-day moving average. The technical picture remains bullish for the gold price despite the sharp two days correction, but a settlement today below the 50-day SMA might attract more sellers, to join the action.
On the downside, the initial support for gold price stands at 1,692 – 1,693 the daily low and the 50-day SMA, while more buying interest should emerge at 1,670 the low from May 1. In case the selling pressure persists, then the next support zone stands at 1,658 the low from April 21.
On the flip side, first resistance stands at 1,732 the daily high. If the gold price breaks above 1,732, then the next hurdle would be met at 1,745 the high from yesterday’s trading session. More selling pressure would emerge at 1,754 the high from May 20.