• Dollar comeback poured cold water on gold’s record-breaking rally.
  • US-China woes, US stimulus deadlock and upbeat NFP boosted the USD.
  • The focus stays on US-China trade talks amid light US docket next week.

Gold (XAU/USD) bulls remained in the charge the past week and went onto hit a strong of fresh all-time highs above the $2050 mark.

The spot, however, paused the surge and corrected sharply by 2% on Friday to settle the week below the latter. Despite the corrective pullback, the yellow metal booked a ninth straight weekly gain, the longest winning streak on a weekly basis.  

The non-yielding gold extended its bullish momentum and clocked fresh life-time highs at $2075 last week, mainly driven by the record low US inflation-adjusted real Treasury yields. The lower Treasury yields indicated faltering US economic recovery and knocked-off the US dollar to fresh two-year lows across its main competitors.

Meanwhile, disappointing employment sub-indices of the ISM Manufacturing and Services PMIs combined with downbeat ADP jobs data pointed to slowing labor market recovery in the US amid coronavirus crisis, exacerbating the pain in the greenback.

Heading into Friday, the tide turned against the USD bears amid a resurgence of the safe-haven demand, as the US-China tech war escalated after US President Donald Trump signed orders banning the Chinese tech apps.

Collaborating with the dollar’s comeback was the report that the US is considering sanctions on the Hong Kong leader Carrie Lam, which accelerated the declines in gold. Also, US fiscal wrangling and above-forecasts US NFP data bolstered the dollar bulls.

In the week ahead, the spotlight will remain on the US-China trade talks, in the face of souring diplomatic ties and worsening virus situation worldwide. The light US calendar will keep the focus shifted towards the broader risk trends and dollar dynamics.

Gold: XAU/USD Key levels to watch