Gold turns positive as US stocks fall

FXStreet (Mumbai) – Gold prices recovered losses to trade marginally positive even though the USD index strengthened after US GDP release as the US stock markets suffered losses in the early session.

Short covering or safe haven demand?

This in one of the rare occasions in the recent pasts when Gold strengthened on signs of risk aversion in the US stock markets despite the strength in the USD index (up 0.50% at 97.70). Moreover, the recovery in Gold contradicts the rise in the 2-year treasury yield, which mimics short-term interest rate expectations.

It is premature to conclude that the metal recovered losses on its safe haven appeal due to weakness on Wall street. The chart may have come into the play, especially since the metal has suffered sharp losses in the last week and a correction is overdue.

Gold Technical Levels

The immediate support is seen at 1082.46 (daily low), under which the prices could extend the drop to 1073 (July 23 low). On the other hand, 1096.57 (hourly 200-MA) and 1100 levels.

Gold prices recovered losses to trade marginally positive even though the USD index strengthened after US GDP release as the US stock markets suffered losses in the early session.

(Market News Provided by FXstreet)