- Gold was seen oscillating in a range through the early European session on Wednesday.
- A modest bounce in the US equity futures undermined the metal’s safe-haven demand.
- Sustained USD buying interest also collaborated to cap the dollar-denominated commodity.
Gold lacked any firm directional bias and remained confined in a narrow trading band, around the $1930 region through the early European session.
Having found a decent support near the $1906 region, around 50-day SMA, the precious staged a goodish bounce on Tuesday from two-week lows and finally settled nearly unchanged for the day. The recovery was triggered by the global flight to safety amid a major selloff in the US equity markets.
Against the backdrop of the ever-increasing coronavirus cases and doubts over the sustainability of the US economic recovery, AstraZeneca delayed testing of a coronavirus vaccine weighed on investors’ sentiment. This, in turn, boosted demand for traditional safe-haven assets, including gold.
The global risk sentiment further took hit on the back of increased risk of a no-deal Brexit. The market worries resurfaced after the UK Prime Minister Boris Johnson threatened to walk away from Brexit talks if a deal is not reached by mid-October.
However, a modest bounce in the US equity futures kept a lid on any further gains for the metal. Adding to this, sustained US dollar buying interest further collaborated towards capping the upside for the dollar-denominated commodity and led to a subdued/range-bound price action on Wednesday.
From a technical perspective, Tuesday’s downfall confirmed a near-term breakdown below a symmetrical triangle. That said, the lack of follow-through selling below the 50-day SMA warrants some caution for bearish traders and positioning for any further near-term depreciating move.
On the other hand, bulls might still need to wait for a sustained strength beyond the $1940-45 supply zone in order to confirm that the commodity might have formed a strong base and placing fresh bets.