Gold futures pared earlier losses on Tuesday to move back above the psychologically important $ 1,800-an-ounce level, finding support from U.S.-China tensions and the continued rise in COVID-19 cases, but also pressured by some profit-taking in the wake of a price climb last week to levels not seen since 2011.
“Sideways price move for the last few days has resulted in day traders booking profit on [a] rise,” said Chintan Karnani, chief market analyst at Insignia Consultants. Gold futures on Monday climbed following two sessions of declines.
For now, Karnani told MarketWatch that he sees a wide trading range of $ 1,776.60 to $ 1,833.60 for gold.
Gold for August delivery GC00,
September silver SIU20,
Investors remain in “wait-and-see mode,” with the $ 1,815-an-ounce level seen as “solid” short-term resistance, said Carlo Alberto De Casa, chief analyst at ActivTrades, in a note.
It would take a fall below $ 1,790 an ounce to denote weakness, he said, while reiterating that gold’s recent rally, which saw it touch levels last seen in 2011, was driven by “massive inflows of [exchange-traded fund] demand, while jewelry and industrial demand are fragile.”
“Any change on the fundamental side will be reflected in the price, but so far markets consider gold is quite fairly priced in the area of $ 1,800,” he said.
Analysts said gold remained underpinned by concerns over a continued rise in COVID-19 infections in the U.S. and elsewhere.
California Gov. Gavin Newsom ordered a rollback of indoor operations at restaurants as well as bars, zoos, wineries, museums, and movie theaters.
The U.S. death toll stands at 135,615 and is rising again after it had started to flatten in mid-to-late April. There are now 41 U.S. states and regions showing increasing cases over a 14-day period, according to a New York Times tracker.
U.S. – China relations are also a factor supporting gold prices.
The Trump administration rejected China’s claims in the South China Sea, while China announced it was imposing sanctions on Lockheed Martin Corp. LMT,
“Huawei 5G has been a key issue between China and the rest of the world. Nations believe that China will spy on them using Huawei 5G technology,” said Karnani. “China will retaliate to the nations who ban Huawai 5G network” and that creates fear among traders of a “blowout between China and rest of the world,” which may support gold.
Among other metals traded on Comex Tuesday, September copper HGU20,