The longer-term outlook for gold remains upbeat, suggesting the safe-haven demand could send the metal back above $2,000, to $2,075
Gold prices retain a modest bullish bias on Thursday, struggling to challenge the $1,950 intermediate resistance on the way toward the $2,000 psychological level. The precious metal bounced from late-August lows registered around $1,906 at the start of the week but still lacks the bullish impetus to stage a more robust and sustainable recovery.
The reason behind the recent weakness in gold prices is the resurgent dollar demand that recouped some of the previous losses amid the oversold conditions. As a result, the bullion failed to capitalize on the latest three-day rout in the US tech stocks that pushed global financial markets lower across the board.
In the short term, gold will likely remain within a consolidative range below $2,000 as the greenback looks relatively upbeat, with the global economy continuing to gradually emerge from the coronavirus crisis. Furthermore, despite the recent sell-off, Us stocks markers remain within a bullish market and could resume the rally after the current correction, suggesting the upside potential in gold prices will likely be limited so far.
In a wider picture, however, the yellow metal could resume the ascent and even challenge fresh all-time highs should geopolitical tensions continue to rise globally. For now, investors express concerns over the developments surrounding Brexit talks that could trigger risk aversion across the European markets in the coming days and next week. Also, US-China relations remain in market focus as the key issues are still unresolved. Besides, oil prices came under significant pressure and could see another rout if signs of a weaker demand continue to emerge.
Against this backdrop, the longer-term outlook for gold remains upbeat, suggesting the safe-haven demand could send the metal back above $2,000, to $2,075 where record highs arrive. So far, the bullion needs to make a decisive break above $1,950 in order to stage a more robust bounce from local lows.