The gold price hit another record high during the Asian trading session today as investors rattled by new restrictions measures in Victoria Australia. Investors continue to add gold in their portfolios as they are looking for cover amid the coronavirus uncertainty. Some better than expected manufacturing data from China earlier and Europe helped improved investors sentiment who proceeded with profit-taking in gold.
The China Manufacturing PMI came in at 52.8, beating the estimates of 51.3 in July. The June reading was at 51.2. The PMI data shows that the manufacturing sector continues to expand as the global demand picks up. The output and new orders figures were the best reading since 2011.
Meanwhile, we see a sharp jump the last hour in the dollar index, which also put pressure in the gold price. Weak dollar was one of the main factors that drove the gold price to record highs during the last four weeks.
The demand for physical gold and jewellery has dropped 46% to 572 tons amid the coronavirus crisis, while the supply also dropped by 6% in the first half of 2020 due to the lockdown. On the other hand, the inflows into gold ETF reach a record high of 734 tons in the first half.
Gold price gives up 0.33% at 1,968, as investors are taking some profits off the table after the record highs hit earlier. I expect a sharp correction around tp 1,910 mark as the RSI 14 index continues to hover into the overbought area since July 21.
Bears are looking for a break below Friday’s low at 1,955 that might attract more sellers to the downside action. More bids would emerge at 1,96 the low from July 28. On the flip side, if bulls return today would face the resistance at 1987.95 today high and then the 2,000 psychological mark.
