During Thursday’s Asian trading session, the yellow metal succeeded in maintaining its upward rally of the previous-day, drawing some further bids above the $1,815 level, as the continuous spread of COVID-19 and its Delta variant raised doubts over global economic recovery. This was a major factor that kept the market trading sentiment down and contributed to the gains in the safe-haven, gold.
Meanwhile, the long-lasting tussle between the US and China exerted some additional pressure on the market trading mood, which led to further gains in gold. Besides this, the weakness of the broad-based US dollar, which was triggered by multiple factors, was seen as another key factor that provided an additional boost to the dollar-denominated commodity,gold. In contrast to this, the increasing optimism surrounding US President Joe Biden’s infrastructure spending bill helped the market trading mood, thereby limiting the losses. This was seen as the key factor that kept a lid on any additional gains in the safe-haven-metal. At the time of writing, GOLD was trading at 1,816.87, and consolidating in the range between 1,806.93 and- 1,818.30.
COVID-19 & the US-China Tussle
Despite the optimism over President Biden’s infrastructure spending bill, the market trading sentiment failed to put a stop its poor early-day performance, remaining bearish during the second half of the Asian session, as the fast spread of COVID-19 and its Delta variant is keeping the market trading sentiment under pressure, due to doubts regarding global economic recovery. As per the latest reports, the spread of COVID-19 and the Delta variant have picked up further pace globally. In Australia, New South Wales recorded 239 new cases for the 24 hours ending on July 28, which was the highest figure in 16 months. on the other side of the globe, Germany registered 3,520 new cases of the coronaviirus, with the death toll increasing by 10.
Meanwhile, the US and the UK also registered a jump in the number of Delta variant COVID cases. As a result, Twitter shut down its offices in San Francisco and New York while the unlocking of the UK is being questioned again. Moreover, Kyodo News said: “Japan’s daily total of COVID-19 cases exceeded 9,000 for the first time on Wednesday. As a result, the surge in infections in Tokyo has started to interrupt the Olympics, which put pressure on the government of Prime Minister Yoshihide Suga to impose stronger countermeasures.
On the other hand, the escalating US-China tussle is still not showing any signs of letting up, with China claiming that there is a standstill in US-Sino relations. This leaves a bearish impact on the global equity market. However, the negative appearance of the US stocks futures tends to highlight the risk-off sentiment, which in turn benefits the dollar-denominated commodity, gold.
Passing of Joe Biden’s Infrastructure Spending Plan
US policymakers supported procedural voting on President Joe Biden’s infrastructure spending plan. On Wednesday, the US bipartisan infrastructure package of $1 trillion attained the 60 votes necessary to advance in the 100-seat Senate, which raised hopes over the passing of the bill. The positive progress in terms of the infrastructure spending plan has helped to limit deeper losses in the the market trading mood.
Bearish US Dollar Making Gold Bullish
Despite the downbeat market sentiment, the broad-based US dollar failed to gain any positive traction. It remained depressed as the FOMC announced its monetary policy decision on Wednesday, sounding optimistic and acknowledging that the economy has made progress in its recovery towards the maximum employment and price stability goals.
However, Fed Chair Jerome Powell took a dovish turn at the post-meeting press conference, indicating that they are some way away from substantial progress on jobs. The Fed was also skeptical about tapering and said that policymakers had discussed some details, but more meetings would be needed to get into it. The difference in tone between the statement and Powell’s remarks exerted heavy downside pressure on the US dollar.
Moving on, the market traders will keep their eyes on the US economic docket, which will highlight the releases of the Advance second-quarter US GDP print, Initial Weekly Jobless Claims and Pending Home Sales. Besides this, the developments surrounding the coronavirus saga and the passing of President Joe Biden’s infrastructure spending plan will continue to play a key role in the direction of the yellow-metal.