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Gold Price Analysis: XAU/USD bulls keep $1,900 on radars amid risk-off mood

  • Gold prices struggle to justify the pullback from $1,879.24.
  • The US-China tussle gets heated as US President Trump frets about the trade deal.
  • Increasing odds of a delay in the US stimulus, downbeat US data adds strength to safe-haven demand.
  • Early-month Preliminary PMIs will decorate the calendar, risk catalysts to keep the driver’s seat.

Gold buyers catch a breather around $1,887 during the initial Asian morning on Friday. In doing so, the bullion traders probe the previous five-day winning streak to the highest since late-2011. Underlying the precious metal’s strength is the rush for risk-safety with the Sino-American tension re-occupying the headlines off-late.

Is US President Trump suggesting no trade deal with China?

During his daily press briefing, US President Donald Trump said that China trade deal “means less to me now than it did”. The comments came after China’s threats to oust American diplomats following the Trump administrations to empty the Chinese Consulate office in Houston. Also increasing the fears of a full-fledged tussle between the world’s top two economies are the fiery statements from US Secretary of State Mike Pompeo and headlines via China’s Global Times (GT).

Other than the pessimism surrounding the Sino-American tussle, updates that the much-awaited US phase 4 fiscal package will be delayed also weigh on the market sentiment. The Financial Times (FT) cite the Senate Leader Mitch McConnel to inflate the odds of no aid package by the end of July, as previously suggested by US Treasury Secretary Steve Mnuchin.

Elsewhere, the coronavirus (COVID-19) also continues to hammer the risk-tone sentiment. The latest news suggests the US new cases cross 4.0 million mark with a shortage of beds in Florida and surging figures in Texas. Further, Victoria and Tokyo are also causing worries for the Australian and Japanese governments respectively whereas India and Brazil keep fighting with fewer resources and a faster rate of virus spread.

As a result, Wall Street benchmarks flashed the first negative closings in five days on Thursday while the US 10-year Treasury yields slip below 0.60%. Additionally, the record low of the US 10-year yields on Treasury-Inflation Protected Securities (TIPS), to -0.907% also portray the risk-off mood.

Looking forward, traders will keenly observe the preliminary readings of July month activity data from Australia, Europe, the UK and the US for fresh impulse. Also keeping the watch-list will be the risk catalysts like virus updates, US-China stories and fiscal budget news.

Technical analysis

Unless slipping back below $1,800 mark, the sellers are less likely to enter any trades. On the contrary, $1,900 and the record high of $1,921.07 continue to lure the bulls.

 

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