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Gold Price Analysis: XAU/USD drops back to $1720 amid risk-on rally in equities

Gold Price Analysis: XAU/USD drops back to $1720 amid risk-on rally in equities

  • XAU bears fight back control in European trading.
  • Risk-on rally in equities offsets broad USD weakness.
  • Next of relevance remains US economic releases.

 Gold (XAU/USD) reverses its Asian bounce to near 1732 levels and falls back into the red zone in the European session, having hit a new three-day low of 1720.83 in the last minutes.

At the time of writing, the spot loses 0.28% to 1722.53, undermined by the risk-on rally in the global equity markets. The latest downtick in the yellow metal could be likely associated with the firmer opening on the European indices, with the pan-European benchmark, the Euro Stoxx posting 1% opening gains.

 

The increased expectations of additional global stimulus measures combined with the optimism over the prospects of a faster economic recovery are pushing the world equities to three-month highs at the expense of the safe-havens such as Gold and US dollar.

The Japanese government is debated a second coronavirus stimulus package while the European Central Bank (ECB) is widely expected to announce an additional ~EUR500 billion bond-buying when it meets on Thursday.

Despite the ongoing downside bias, the alarming political scenario in the US amid escalating riots in the cities and looming concerns over the virus-induced economic costs will continue to offer some reprieve to the bulls.

Meanwhile, the medium-term bullish bias remains intact in the metal so long as it holds above the critical 1700 figure. Further, in evidence of investors’ confidence in the safe-haven, Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose for a sixth straight session on Tuesday.

Gold: Technical levels to watch

With the renewed weakness, immediate support is seen at 1712.96 (May 29 low). A break below which the 1700 mark will be tested. Alternatively, the next resistances are aligned at 1732.10 (daily high), 1740 (round number) and 1745.12 (June 2 high).

Gold: Additional levels

XAU/USD

OVERVIEW
Today last price 1722.53
Today Daily Change -5.26
Today Daily Change % -0.30
Today daily open 1727.68
 
TRENDS
Daily SMA20 1722.31
Daily SMA50 1693.04
Daily SMA100 1637.99
Daily SMA200 1567.15
 
LEVELS
Previous Daily High 1745.12
Previous Daily Low 1721.71
Previous Weekly High 1737.78
Previous Weekly Low 1693.78
Previous Monthly High 1765.38
Previous Monthly Low 1670.72
Daily Fibonacci 38.2% 1730.65
Daily Fibonacci 61.8% 1736.18
Daily Pivot Point S1 1717.89
Daily Pivot Point S2 1708.09
Daily Pivot Point S3 1694.48
Daily Pivot Point R1 1741.3
Daily Pivot Point R2 1754.91
Daily Pivot Point R3 1764.71

 

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