Gold drifted lower at the first trading session for the week. Gold traders seem to be pulling their long positions, from the safe-haven asset over macros, that U.S. President Donald Trump could soon be discharged from the hospital as early as today, where he is being treated for COVID-19.
At the time this report was drafted, gold was trading below the $1,900 price levels. Just before the recent slump, the precious metal had posted its biggest weekly percentage gain since early August, last Friday, in the wake of President Trump and his wife Melania Trump catching the COVID-19 bug.
His doctors disclosed yesterday, that the President was recovering and could be discharged as early as Monday. Unsurprisingly, global stocks futures were trading up.
Quick Fact: It should be noted that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets. Humans are emotionally and physically drawn to gold. It provides a significant store of value. Global Investors buy gold mainly to hedge against inflation.
However, Stephen Innes, Chief Global Market Strategist at Axi, shared a contradictory opinion, putting his odds with the precious metal in an explanatory note,
“The markets maintain a favorable view of gold. Still, travel direction is unlikely to be a straightforward process dotted with periods yields backing up, and bouts haven strength should create headwinds along the way.
“After gold initially surged on haven demand gold on Friday, bullion gave way to a stable dollar and as risk stabilized.
Ostensibly, the president testing positive for COVID-19 appears gold bullish. It adds to uncertainty, as we head into an election. Still, with the dollar holding firm, it lessens the appeal for gold.”
Ultimately, how the yellow metal reacts in the future will be best viewed through the value of the U.S dollar index. EURUSD near term direction, given gold sensitivity to the cross, will likely hold the cards.