Gold drops below $1,700 on strong risk appetite
- Wall Street's main indexes post decisive gains on Wednesday.
- Market optimism grows on hopes of coronavirus treatment.
- US Dollar Index stays in red near 99.70 ahead of FOMC.
The XAU/USD pair extended its daily slide during the American trading hours as the risk-positive market environment made it difficult for the safe-haven precious metal to find. As of writing, the pair was down 0.5% on the day at $1,699.80.
Heightened hopes of Gilead Sciences' remdesivir being used as an effective treatment against coronavirus seem to be fueling the risk-on flows. The National Institutes of Health (NIH), an agency of the US Department of Health and Human Services, announced that its clinical trial revealed that remdesivir accelerates the recovery from advanced COVID-19 cases.
Boosted by the upbeat market mood, Wall Street's main indexes were rising between 2.7% and 3.35% at the time of press.
DXY stays in the negative territory
In the meantime, the US Bureau of Economic Analysis' first estimate on Thursday showed that the real GDP contracted by 4.8% on a yearly basis in the first quarter. However, this reading had little to no impact on the greenback ahead of the FOMC's monetary policy announcements. At the moment, the US Dollar Index (DXY) is down 0.3% on the day near 99.70, allowing the pair to limit its losses for the time being.
Commenting on the GDP data, "the lockdown of the economy, which occurred in most states, did not really start to take effect until mid-March/early April,” noted Wells Fargo analysts. “We look for real GDP to contract at an unprecedented annualized rate in excess of 20% in Q2-2020. Furthermore, we expect that the unemployment rate will surge to more than 15% in April or May.”
Technical levels to watch for