Gold: A key proxy to dollar demand
Dollar funding pressures have been a key theme in the market over the past two weeks and will continue to stay that way so long as the market is experiencing the current meltdown and financial dislocations across multiple asset classes.
But should there be enough Fed or central bank intervention to stem the bleeding, investors may turn towards gold as a "safer" choice considering the circumstances.
Gold has been consolidating losses around $1,500 for the past few sessions and price action is starting to switch back towards a battle around the key hourly moving averages.
If buyers can search for some upside momentum in moving back above $1,500 and towards the 200-hour moving average at $1,545, it would be a good start.
For now, gold is acting more like a proxy for dollar funding pressures too. If investors can't get their hands on the dollar, gold would be their next best bet - besides liquidation pressures of course.
Hence, if liquidation pressures start to ease and the dollar demand is well being met, gold could really shine in this kind of environment - so long as the market is still heavily focused on low yields, central bank easing and the virus outbreak causing a global recession.