- Gold price struggles for clear direction amid mixed clues, pare weekly gains.
- Delta variant probe economic recovery, Asia-Pacific largely hit.
- DXY tracks US Treasury yield rebound but gold sellers wait for more clues.
- Bearish candlestick below the key EMA confluence keeps sellers hopeful.
Gold (XAU/USD) remains volatile in a range above $1,800, around $1,802 heading into Friday’s European session. The commodity prices rose to the highest since June 17 the previous day before closing almost unchanged and portray a bearish candlestick pattern to probe the six-day recovery from June’s lows.
Behind the competing moves are gold’s safe-haven nature and the US Treasury yields’ rebound, which in turn put a bid under the US dollar index (DXY).
To state the fact, the coronavirus (COVID-19) woes are back to haunt the market sentiment and challenge the economic recovery hopes. The challenges are grim because the virus variants do spread faster and resist vaccines.
While the figures from the US haven’t been so grim, the UK covid infections jump to January levels and so do pandemic numbers from South Korea, Indonesia and Thailand. Further, Australia’s New South Wales (NSW) becomes another member, unfortunately, to bear the burden of the virus woes and signal one more week of activity restrictions.
Read: Coronavirus Update: South Korea marks record infections, NSW hints another week-long lockdown
Identifying the fears of the covid, San Francisco Fed President Mary C. Daly recently said, per Financial Times (FT), that the Delta coronavirus variant and low vaccination rates in some parts of the world pose a threat to the global recovery as she urged caution in removing monetary support for the US economy.
Elsewhere, the escalation in the US-China tussles, following the signals of more Chinese companies’ trimming from the US bourses, per Reuters, also weighs on the market sentiment. Furthermore, sluggish inflation numbers from China and the recent uptick in US Jobless Claims back the risk-off mood, which in turn contributes to the gold moves.
Amid these plays, S&P 500 Futures print mild losses by the press time, tracking Wall Street’s losses, whereas the US Treasury yields recover from February lows, marked the previous day. Further, the US dollar index (DXY) also reverses the previous day’s pullback from early April tops.
Given the mixed sentiment amid the broad risk aversion wave, gold traders may wait for clarity of moves and concentrate on further covid updates in the meantime. It should be noted that the global policymakers’ acceptance of the covid woes may indirectly favor the need for easy money and trigger a pullback of the US dollar, which in turn will add strength to the gold upside.
Technical analysis: Bearish seeking entries
Despite refreshing three-week high, gold prices fail to cross a confluence of 50-day and 100-day EMA on Thursday, posting a bearish candlestick on the daily chart.
The resulted downside risk, however, needs confirmation as the quote stays inside the $1,813 to $1,794 crucial area including the stated EMA confluence and a horizontal line from June 23.
Hence, a daily closing below $1,794 could bolster the bearish moves towards $1,760 before targeting the late June low near $1,750.
On the contrary, an upside break of $1,813 won’t hesitate to challenge the early May swing highs near $1,845. Though, June 04 lows near $1,855 can test the gold buyers afterward.
Gold: Daily chart
Trend: Further weakness expected