Gold Price Analysis: XAU/USD holds on to recovery gains above $1,800 amid mixed clues
|- Gold keeps Friday’s recovery moves to nurse heaviest weekly losses in a month.
- US dollar index dropped from two-month top on mixed employment data at home.
- Risks dwindle as stimulus hopes battle downbeat vaccine news, geopolitical risk from Iran.
- US covid relief package headlines, virus/vaccine news gain major attention amid a light calendar in Asia.
Gold takes the bids near $1,818.50 amid the initial Asian trading on Monday. In doing so, the yellow metal extends Friday’s run-up despite mixed risk catalysts and a lack of major data/events.
Bulls cheer US dollar pullback…
Among other things, the US dollar index (DXY) pullback from a two-month high seems to be the strongest factor favoring the bullion’s latest recovery moves. The greenback gauge dropped heavily after the American employment data for January marked mixed results with a drop in Unemployment Rate and revised down previous readings for the headlines Nonfarm Payrolls (NFP).
It’s worth mentioning that the risks were positive earlier amid optimism surrounding US President Joe Biden’s $1.9 trillion covid relief package. The proposal passed the Senate, with Vice President’s vote, to return to Congress for details during the last week.
On the contrary, vaccine deliveries and production delays join the latest study, conveyed by the Financial Times (FT), suggesting that the Oxford/AstraZeneca vaccines not effective against the South African variant, to challenge the mood. Also on the negative side was news from Iran that rejects the US nuclear deal proposals while demanding the American return to the pact.
Amid these plays, S&P 500 Futures rise 0.21% while taking clues from Friday’s upbeat performance of the Wall Street benchmarks. Further, the US 10-year Treasury yields also stay positive near March 2020 peak by press time.
Looking forward, a lack of major data/events in Asia keeps the gold traders searching for a major push to hold the latest gains above $1,800.
Technical analysis
Unless bouncing back beyond the 10-week-old rising trend line, currently around $1,819, gold prices stay directed towards the November 2020 low of $1,764.60.
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