- Gold prices remain sluggish above the $1,800 mark.
- China’s COVID spread lends support to the US dollar.
- Markets are eying China’s PMI data to be released on Friday.
While Gold futures prices rose to an intraday high of $1,818, the market has been sluggish since early Friday. In addition to mixed headlines on recent key risk catalysts, the reason could be the end-of-year holiday spirit and a light calendar.
As a result of positive sentiment, US 10-year Treasury yields have moderated their decline from a six-week high to 3.8%, while S&P 500 futures are showing modest losses just below 3,865, despite the positive close on Wall Street.
The global recession is taking its toll partly because of pessimism over the conditions in China and conflicts between Ukraine and Russia. The discovery of a Covid pill and the potential for virus spikes in China may also contribute to the chatter that the economic downturn in the US and Europe will not slow markets. In addition, a $1.7 trillion US government funding bill for fiscal 2023 may protect optimists.
Alternatively, British health data company Airfinity reported on Thursday that COVID-19 is likely to kill 9,000 people in China every day, double the number expected the day earlier.
Covid testing requirements for travelers from China have already been announced in seven countries, including the US, the UK, and Japan. Furthermore, a US financing law supporting arms sales to Ukraine is depressing sentiment.
Markets were inactive against mixed second-tier US data, helping dollar bears maintain control. It will be important for gold traders to see a virtual meeting between Chinese President Xi Jinping and Russian counterpart Vladimir Putin.
Also on the calendar is the Chicago Purchasing Managers’ Index for December, which is expected to rise to 41.2 from 37.2. On Saturday, the official PMI data for China’s manufacturing and nonmanufacturing sectors will be released for the last time before China’s 2022 entry into the market.
Although recent sentiment concerns have kept gold buyers on edge, low-interest rates and a likely economic recovery could keep them on their toes in 2023.