Gold consolidates in a range, holds steady near $1700 mark
- Gold lacked any firm directional bias and remained confined in a range around $1700 mark.
- A modest pullback in the equity markets underpinned the commodity’s safe-haven demand.
- A sudden pickup in the USD demand turned out to be a key factor that capped the upside.
Gold seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, around the $1700 mark.
A combination of diverging forces failed to provide any meaningful impetus to the precious metal and led to a directionless/two-way price action for the second consecutive session on Tuesday.
The spillover effect from a selloff in the European bond market dragged the equity markets lower in the last hour and turned out to be a key factor lending some support to the safe-haven commodity.
The positive factor, to a larger extent, was offset by the latest optimism over the re-opening of economies in some part of the world and a sudden pickup in the US dollar demand.
A stronger greenback tends to dent demand for the dollar-denominated commodity, albeit the downside is likely to remain limited amid escalating US-China tensions over the origin of the coronavirus.
This coupled with persistent uncertainty over the severity of the economic damage caused by the coronavirus-induced lockdowns might further help limit any meaningful downside, at least for now.
Hence, it will be prudent to wait for some strong follow-through selling, possibly below last Friday's swing low near the $1670 level, before positioning for any further near-term depreciating move.
Moving ahead, market participants now look forward to the release of the US ISM Non-Manufacturing PMI, which might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch