· Gold rose on Tuesday, underpinned by Sino-U.S. trade friction and global stimulus although promising early-stage data for a potential COVID-19 vaccine spurred some risk appetite, keeping prices below a more than 7-year high hit in the last session.
Spot gold was up 0.2% at $1,735.83 per ounce by 0349 GMT. U.S. gold futures gained 0.3% to $1,739.80.
· Despite the news on a potential coronavirus vaccine lighting a fire under the equity markets, gold will remain very well bid due to the "ridiculously huge" Federal Reserve balance sheet, said Stephen Innes, chief market strategist at financial services firm AxiCorp.
On Monday, the metal hit its highest since October 2012 before retreating to close lower, as stocks and oil surged after drugmaker Moderna said its COVID-19 experimental vaccine showed promising results in an early-stage trial.
Asian shares jumped as the news boosted hopes for a swift reopening of the global economy.
Indicating some return to normalcy, epicentres of the pandemic, including New York, Italy and Spain, are gradually lifting restrictions that have kept millions inside.
· "Gold investors still see the opportunity on both sides of the coin right now because optimism from lockdowns is also inflationary," said Innes.
"But the trade war itself is a huge risk as we saw through 2019, that was the primary driver for gold prices to go up."
Gold tends to benefit from widespread stimulus from central banks because it is widely viewed as a hedge against inflation and currency debasement.
· The metal has risen about 14% this year as central banks rolled out a wave of interest rate cuts and other stimulus to limit the economic damage from the pandemic.
Meanwhile, the International Monetary Fund's head said the global economy would take much longer to recover fully from the shock caused by the pandemic than initially expected.
· Raising fears of a further deterioration in Sino-U.S. relations, stock exchange Nasdaq Inc is set to unveil new restrictions on initial public offerings, which will make it more difficult for some Chinese companies to debut on it, sources said.
· Gold Price Analysis: Extends recovery from 100-HMA, $1,750 back in focus
While extending its bounce from 100-HMA, Gold prices take the bids near $1,739.65, up 0.34% on a day with the intraday high of $1,740.41, during the early Tuesday.
The bullion currently aims to challenge immediate horizontal resistance around $1,752 ahead of targeting the recent top, also the highest since late-2012, around $1,765.40.
Should there be a further upside past-$1,765.40, the year 2012 top surrounding $1,795 could lure the buyers.
On the downside, the precious metal’s declines below 100-HMA level of $1,730 need validation from weekly support line, at $1,717 now, before highlighting $1,700 and the monthly bottom surrounding $1,670.
· Gold Price Analysis: Needs to recapture $1,747 to resume rally – Confluence Detector
Gold has suffered a setback after surging to the highest in 7.5 years. Can it recover? There are a few hurdles on the way up.
The Technical Confluences Indicator is showing that XAU/USD first needs to surpass $1,737, which is the convergence of the Fibonacci 23.6% one-week, the Simple Moving Average 5-1h, and the Bollinger Band 15min-Middle.
It is followed by $1,742, which is the meeting point of the Bollinger Band one-day Upper and the Fibonacci 38.2% one-day.
Further up, the strongest resistance is at $1,747, where the SMA 10-4h and the previous monthly high converge.
Strong support awaits at $1,728, which is the confluence of the Fibonacci 38.2% one-week and the previous daily low.
· Palladium slipped 0.3% to $2,006.95 per ounce, platinum fell 1% to $810.12, and silver declined 0.6% to $17.07.
Reference: Reuters, FX Street
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