Gold teases $1700 break during three-day declines
- Gold extends the previous two-day downside, $1,700 on bears’ radar.
- US dollar pullback, optimism surrounding ease of global lockdown restrictions weigh on the bullion.
- Declines in oil prices fail to put a floor under the safe-haven.
Gold drops to $1,701.40, down 0.75% on a day, after bouncing off the intraday low of $1,700.50 amid the early Tuesday’s trading. In doing so, the yellow metal registers three-day losing streak.
The easing of lockdown restrictions in Australia and New Zealand, coupled with the recent pullback in the US dollar, seems to have exerted downside pressure on the bullion off-late. Also favoring the risk-on sentiment could be China’s gradual recoveries from the coronavirus (COVID-19). On Monday, the global epicenter of the deadly virus, Wuhan, discharged the last patient of the pandemic and announced itself as virus-free.
Even so, fears of a US-China tussle, mainly due to the Trump administration’s allegations on China, coupled with the extended fall in oil prices keep the risks under check.
It should also be noted that the BOJ’s scrapping of limits for the purchase of Japanese Government Bonds (JGBs) also divert the funds off the precious metal.
Amid these plays, US 10-year Treasury yields seesaw around 0.650% whereas stocks in Asia flash mixed clues with mild gains in Pacific jostling with soft losses in Japan and China.
While the virus updates remain as the key driver, US data and performance of the oil prices could also offer intermediate moves to the gold prices.
Technical analysis
A sustained break below the 10-day SMA level of $1,709 will drag the bullion further down towards 21-day SMA figures of $1,675.