Coronavirus-related risks and US fiscal stimulus uncertainty could lift the prices in the longer-run 

Investors continue to take profit in the gold market following a massive rally seen March to August, starting Monday trading on the back foot after strong losses last week. Gold has already retraced over 10% from its all-time high of $ 2,075 observed in August and looks poised for further decline, at least in the short term. 

The short-term outlook for the precious metal hinges on the greenback, especially ahead of the first US presidential election debate on Tuesday. Friday’s US non-farm payroll report could also affect USD dynamics this week. 

Today, gold prices have touched the 100-daily moving average for the first time since April. This MA that arrives marginally below the $1,850 area, and a break below it could trigger a more aggressive downside correction within a longer-term bullish trend. If so, the initial bearish target could be expected at $1,815. Once below, the market focus will shift to the $1,800 handle. 

As global stocks are on the offensive on Monday, being fueled by a rise in the industrial profits in China for the fourth straight month, the yellow metal will likely stay under some pressure in the short term. In a wider picture, however, the bullion could attract demand at lower levels and regain its bullish impetus amid the persisting political, economic, and geopolitical uncertainty globally. 

Coronavirus-related risks and US fiscal stimulus uncertainty could also lift the prices, especially if the greenback comes back under pressure after the recent surge. Of note, the global death toll from coronavirus exceeds one million on Sunday, with cases rising further in many countries including India where the total number of cases crossed a 6-million mark during the weekend.  

In recent trading, the metal managed to trim intraday losses, buoyed in part by a weaker dollar that is losing ground versus major counterparts on Monday. If the USD pressure intensifies any time soon, the precious metal could stay above the mentioned crucial moving average and even stage a bounce from the current levels.  


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