Daily Market Recap - Gold

Gold prices are rising on Monday after having set a new monthly high at $1,763.53 per ounce, falling just short of the May 18th, or 7-year high of 1,765.30. Traders are currently trapped between strengthening economic data and fears of a second wave of COVID-19 with no clear direction in sight.

A recent report from the World Health Organisation stated that there was a record jump in global cases, with the largest increases seen in North and South America. In the US, two Federal Reserve officials noted that unemployment rates may rise again if this pandemic is not brought under control, likely in reference to the closure by Apple of several of its US stores as a pre-emptive measure.

Central banks around the world have been propping up their economies via large monetary stimulus programs in a bid to mitigate the effects of the downturn. With these policies come increased inflation concerns, which by looking at the rising PMI figures, suggest gold may very well be supported in the medium run.

From a technical perspective, gold has managed to clear above the recent trading range of 1,745 and 1,700 but stalled in front of the true test of 1,765. Price action at this point will dictate whether bulls have enough momentum to cross above and go for the 1,800s.

Should gold prices manage to close firmly above 1,754, the bulls may have a shot in the coming sessions. However, for now, it is still probable that gold prices bounce back below the 1,745 and resumes its sideways trading pattern.

(Chart Source: Tradingview 01.06.2020)

Looking ahead, traders will be paying close attention to US treasury yields as further signs of tightening will fuel safe-haven demand into gold. On the flip side, a sustained rise in US equities will keep gains in check.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.