Gold prices retreated below $1,862 after hitting the record high of
$2,074.92 on August 6, which is because traders have widely dumped their
long position in the fear of the declining risk aversion considering
Russia has successfully registered the COVID-19 vaccine. Thereafter,
bargain hunting spurred gold to reclaim the ground of $2,000, but the
resistance ahead of $2,015.61 hampered gold again and took a toll over
$100. Whether gold will regain its shine and register another record
high has become the talking points across financial markets.To get more
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Traders actually have kept an eye out for opportunities to liquidate
their position at a profit after noticing the sharp rise in gold prices.
The reason lies in the purpose of gold purchase. Traders buy gold not
for long-term holding, but simply for profiting. Once the trading prices
appeal to them, they will sell out for bumper profits and wait to buy
on dips after the next slump.
In fact, financial markets have definitely achieve a consensus that
various vaccines from countries worldwide will be available in the short
term, which will certainly accelerate the recovery in global economics
and weaken the risk aversion. Under such condition, the central banks of
various countries may reduce or even suspend the quantitative easing.
The U.S. dollar index, the largest influencing factor of gold prices,
has also shown a rebound mainly because the European Central Bank
Minutes showed that its monetary policy is more dovish than that of the
FED with a cascade of PMI data much worse than that in the U.S. As a
result, the Eurozone is obviously the weaker one in the comparison of
the economic and monetary policies of the two areas, which may cause a
steep rebound in DXY and then suppress gold prices. As DXY sees its most
critical resistance at the level of 94, a breach above there will
negatively impact gold prices, pushing them to break through the support
level of $1,862 and move forward to another significant one of $1,765.
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