Gold prices are stabilising today following a relatively volatile session on Tuesday, with the precious metal hitting a record high yesterday, up to 1,981. Strong profit-taking in early European trading, however, pushed the price back down to 1,909, with buyers flocking in for bottom fishing, so the price gradually upped to 1,950.
Factors that are pushing gold prices
One of the main factors that pushed gold prices up to a record high is the rising number of new COVID-19 infections in some key U.S. states, combined with new, additional travel restrictions as they further threaten or delay a speedy economic recovery.
Also pushing up the gold price was newly released data in the U.S. yesterday, as the Conference Board’s Consumer Confidence Index (C.B.) dropped to 92.6 this month, from 98.3 in June. This is below economists’ earlier anticipated 94.5. The drop is largely attributed to the growing number of Corona infections across the country. As a result, the Consumer Expectations Index also dropped from 106.1 to 91.5.
Another factor that contributes to gold being pushed up is the ongoing tensions between China and the U.S, with both political heavyweights closing down a consulate in each other’s country.
Also, the current low interest rate environment in the U.S. as well as the G10 does make gold – a non-yielding asset – increasingly attractive. Finally, the most recent pressure on selling USD, which drove the greenback to two-year lows, further supports gold as a dollar-denominated asset.
FOMC Preview
Today, investors will primarily focus on the expected decision by the Federal Reserve, later today, to keep interest rates unchanged and maintain a largely dovish approach.
Gold Technical Analysis
Gold price is 0.26% lower at 1,953, ahead of the Fed decision, which might provide high volatility before and after the decision. Gold price made higher highs and higher lows for the last seven consecutive sessions. The pullback yesterday and the fast rebound shows that the corrections are still a buying opportunity. Gold has entered the overbought zone since July 20, and a sharp correction can’t be ruled out.
Bears attempted yesterday to cancel the positive momentum but failed. Today, bearish traders looking for a close below yesterday’s lows at 1,906. A break below would challenge the next support at 1,863 – the low from July 23. If the selling pressure continues the next critical support is the 50-day moving average at 1,774.
Bulls, on the other hand, face the intraday resistance at 1,964 – today’s high. A move above would open the way for 1,981 the all-time highs from yesterday.
Don’t miss a beat! Follow us on Telegram and Twitter.
Gold Price Daily Chart
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Nikolas on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.