Gold Maintains Positions Despite Dollar Recovery

Gold was operating relatively flat on Tuesday after having overcome several bearish attempts. The publication of good data on US retail sales and progress towards a vaccine against COVID-19 has harmed market sentiment. Beijing officials also reported new coronavirus cases. 

The United States government reported an increase in retail sales of 17.7% in May, well above the 8% expected by the market. Retail sales, excluding automobiles, have grown 12.4%, also above the 5.5% expected by the market.

On the other hand, geopolitical tensions and stimulus measures from central banks worldwide helped increase bullion prices. Gold often represents a haven during a period of economic and political instability.

Besides, the Federal Reserve announced an expansion of its purchase of corporate bonds. The Bank of Japan declared an increase in its loan program has boosted the stock markets.

In that environment, the dollar index was trading higher on Tuesday. After finding support at 96.50, the DXY was up 0.46% on the day to trade above 97.00. 

Gold fights for a value of 1,725

Gold has endured several bassists’ attempts during the day and is now trading around the 1,725 area. Dollar growth is putting downward pressure on the metal, but the central bank cash flow is also keeping XAU/USD afloat. 

For several weeks now, gold has been trading in a range between 1,680 and 1,740. Last time, it increased on Thursday of last week with a high of 1,744. Since then, the XAU/USD has been trading relatively low.

Traders are still looking to dips as buying opportunities. Analysts consider the $1600 level as the next primary target. They think that, in the long term, gold is going to head higher. There is a lot of support for gold.

Silver has seen an increase

As for silver, the metal was operating higher on Tuesday. Silver has had three negative sessions earlier. On Monday, the metal fell to its lowest level since May 27, at $16.95. This was the same level as the 200-day moving average.

However, the XAG/USD was rebuilt on the Fed’s news and began to regain positions. Today it is trading 0.62% higher, around $17.50.

The chart continues to show a slightly bearish trend. However, $16.90 has now been shown as a significant buying zone. Furthermore, risk appetite is helping the metal to gain positions.