Gold Price Analysis: XAU/USD buyers flirt with $1,900 amid upbeat markets
|- Gold picks up bids after reversing from $1,882 towards the $1,900 threshold.
- Global markets cheer hopes of further stimulus, expectations of the coronavirus vaccine.
- US dollar seems to lose its safe-haven appeal amid political jitters at home.
- China’s return, stimulus updates and vaccine news will be the key.
Gold prices remain on the positive side for the third consecutive day, currently around $1,896, during the initial Asian session on Friday. The yellow metal took a U-turn from $1,882 the previous day, to close around $1,894, as risk sentiment improved on US President Trump’s stimulus updates.
US dollar gradually loses market-favorite status…
Although the Fed policymakers anticipate economic recovery, assuming government help that is likely to arrive soon, the US dollar index (DXY) dropped for the second consecutive day on Thursday. Political uncertainty in the US and the market’s rush towards the riskier assets, amid hopes of further stimulus, also weigh on the greenback. As a result, gold buyers cheer the inverse correlation with the US currency while trimming Tuesday’s heavy losses.
Also favoring the gold bulls could be the surge in the coronavirus (COVID-19) numbers in the UK and Europe. Recently, Spanish Prime Minister (PM) Pedro Sánchez declared a state of emergency in Madrid whereas calls of closing the pubs and restaurants in Northern England have been out and clear off-late.
Furthermore, the US geopolitical tension with the Middle East and China offers an additional reason for the bullion buyers to remain hopeful. While Beijing has recently started witnessing global pressure against its treatment of Uighur Muslims, 18 Iranian banks were sanctions off-late by the US State Department to curb Tehran’s financial access.
Against this backdrop, S&P 500 Futures print 0.17% intraday gains after Wall Street benchmarks closed Thursday on a positive note.
With the Chinese players about to return from over a week of holidays, their reaction to the latest market updates will be the key. At the same time, the US President’s Donald Trump’s twitter handle will keep its importance and so does his second Fox appearance, after leaving the interview in between earlier, at 01: 00 GMT on Friday.
Technical analysis
A three-week-old falling trend line joins 21-day SMA near $1,907/08 to challenge the short-term gold buyers. On the contrary, sellers remain less hopeful of entries unless witnessing a clear break below the 100-day SMA level of $1,862.
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