· Gold firmed on Wednesday buoyed by rising demand for safe-haven investments, as the extent of damage from the coronavirus became more apparent following bleak data from major economies and optimism about a potential vaccine fizzled out.
Spot gold was up 0.2% to $1,746.58 per ounce by 0606 GMT. U.S. gold futures rose 0.4% to $1,751.90.
· "The so called 'vaccine hope' rally in equities has weakened. Gold is back in focus with bad economic releases...trade relations can take an ugly turn at any moment," said Jigar Trivedi, commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai.
The optimism from early data for a vaccine faltered after a medical news website reported it was insufficient, causing U.S. equities to fall and Asian stocks to be flat after rallying earlier this week.
U.S. homebuilding dropped by the most on record in April and permits for future construction tumbled, leading to fears the pandemic would lead to the deepest economic contraction in the second quarter since the Great Depression.
In Japan, business confidence collapsed in May, hitting decade lows as firms braced for a protracted period of economic weakness, the Reuters Tankan survey showed.
· Markets now await the Federal Open Market Committee's April 28-29 policy meeting minutes at 1800 GMT.
In testimony before the U.S. Senate Banking Committee, Federal Reserve Chairman Jerome Powell said the Fed was looking at extending access to the credit facilities to additional borrowers, including states with smaller populations.
· "What the Fed does in the next few months will be pretty important, and certainly Powell did indicate that the rates would remain near zero for foreseeable future," ANZ analyst Daniel Hynes said.
Lower interest rates benefit the non-interest bearing gold.
· Gold Price Outlook: XAU/USD Breakout at Extremes- Reload or Reversal?
Gold prices are up more than 20% off the yearly low with the advance taking XAU/USD back into a critical multi-year resistance slope. While the broader outlook remains constructive, the immediate advance may be vulnerable at these levels and we’re looking for the weekly close for guidance.
Initial support rests at the March high-close at 1673 backed by the 38.2% retracement of the yearly range at 1645- losses should be governed by this level IF price is indeed heading higher.A topside breach from here exposes subsequent resistance objectives at the 2012 high at 1795 backed by the record high-week close at 1856.
· Gold Price Analysis: XAU climbs to $1,750, forming a rising wedge
Gold's recovery from Tuesday's low of $1,726 to $1,750 has taken the shape of a rising wedge pattern on the 15-minute chart.
A rising wedge comprises converging trendlines connecting higher highs and higher lows. The converging nature of trendlines is indicative of buyer exhaustion. Hence, a breakdown is considered a sign of trend change and often leads fuels a price drop to the apex or starting point of the wedge.
At press time, gold is trading at $1,748 per ounce and the support of the rising wedge is located at $1,743. A breakdown, if confirmed, would open the doors to a re-test of $1,726. Alternatively, acceptance above $1,750 would shift the focus to the recent highs near $1,765.
A bullish scenario looks likely as Tuesday's green candle engulfed the body of Monday's inverted bearish hammer candle, weakening the case for an extended pullback.
· Elsewhere, palladium fell 0.9% to $2,039.93 per ounce, while silver rose 0.8% to $17.53 and platinum rose 0.3% to $835.28.
Reference: Reuters, FX Street, Daily FX
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