Gold Price Analysis: XAU/USD refreshes multi-year high above $1,775 as virus woes deepen

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  • Gold prices pop and drop during the week-start move, refreshes the highest levels since October 2012.
  • Worsening situations in Texas, Florida and Arizona keep fears of virus wave 2.0 on the desk.
  • Escalating tension between India and China, global trade wars offer additional fuel to the yellow metal.
  • The month-start economics, headed by the US NFP and Chinese PMIs, will decorate the calendar.

Gold prices trade near $1,775, intraday high of $1,775.94, during the early Monday morning in Asia. The bullion recently surged to the fresh high over seven years but failed to keep the bids during the early Asian session’s lack of liquidity. Even so, the XAU/USD prices remain in the vicinity of October 2012 highs.

Although fears of another round of the coronavirus (COVID-19) become the key fuel for the precious metal’s upside, geopolitical tension in Asia and trade wars are additional catalysts favoring the rise.

Coronavirus is the key…

The second wave of the COVID-19 outbreak in the US, mainly in states like Texas, Florida and Arizona becomes the firepower for the latest rush to risk-safety. As per the latest updates from Reuters, Texas registered consecutive seven days of above 5,000 readings by the weekend whereas California’s State Health Department said cases rise by 4,810 to 211,243 total as of June 27. It’s worth mentioning that the pandemic is also weighing on the US Presidential election campaigns. Recently, Mike Pence had to delay visits to Arizona and Florida, which in turn supports the Washington Post to say that US President Donald Trump campaign scrambling to revive the imperiled re-election bid.

Elsewhere, geopolitical tension between India and China continues to negatively affect the market’s risk-tone sentiment. The reason is that war during tough times, due to the pandemic, will be worst for the emerging economies.

Additionally, trade tension between the US and China joins the Trump administration’s hard stand against the EU/UK goods and recent threats to levy tariffs on Canadian aluminum offer extra burden on the market sentiment. It’s worth mentioning that the US sanctions on Iran continue to portray the West and Arab tension.

Read: China-India border tensions spark trade friction in 5G and autos – Nikkei

Amid all these catalysts, the US equities remain depressed whereas treasury yields also revisit mid-May lows by the end of the last week. Further, the S&P 500 Futures drop 0.45% to 2,989 by the press time.

While a lack of major economics scheduled for publishing today might keep gold traders stick to the trade/virus updates, Tuesday’s official PMI figures from China and Thursday’s US employment data for June will be the key for this week’s calendar.

Technical analysis

An upward sloping trend line from June 05, at $1,751.30 now, becomes nearby key support ahead of 21-day SMA level of $1,733.90. However, fresh buying interest will be challenged by an ascending resistance line stretched from April 14, currently around $1,788.