Gold Price Analysis: XAU/USD licks wounds below $1,850 as risks wobble
|- Gold holds lower ground despite recently bouncing off $1,830.
- Talks over US stimulus, Brexit drag on, virus woes add to the market worries.
- DXY snaps four-day recovery while tracking US treasury yields, Wall Street benchmarks trade mixed.
- Vaccine news, Brexit updates and stimulus headlines can entertain Asian traders amid a light calendar.
Gold fades the latest pullback from $1,830.32 while easing to $1,835 at the start of Friday’s Asian session. In doing so, the yellow metal nurses losses after declining for the last two days. Although optimism over the coronavirus (COVID-19) vaccine probe the gold bears’ dominance, wait for the US covid stimulus and Brexit worries joins worsening virus conditions in American to keep the commodity afloat.
Bulls and bears jostle amid cautious optimism…
With the speedy government approvals to the COVID-19 vaccine by the UK and Canada, with the US in the pipeline, global traders eye recovery as the American policymakers are near to clinching the deal on the much-awaited stimulus. However, the wait for the same joins negative signals for Brexit, amid preparations of contingency plans, to weigh on the risks and the precious metal off-late.
Also on the negative side is the record covid-led death toll in the US as well as a jump in the US Jobless Claims, coupled with sticky inflation data. It’s worth mentioning that the Sino-American and the Aussie-China tussles are offering background music to the bears but have been heard a little off-late.
Meanwhile, the European Central Bank’s (ECB) addition to the stimulus, as expected, offered a sigh of relief to the bloc’s equity traders while Wall Street players end the day on mixed footings.
These catalysts portrayed the US dollar index (DXY) losses for the first time in the last five days while the US 10-year Treasury yields also dropped, recently by 3.5 basis points (bps), to 0.908% at the end of Thursday’s North American session.
Looking forward, a light calendar in Asia keeps the trader directed towards qualitative catalysts for fresh impetus. A vaccine announcement from the US Food and Drug Administration (FDA) is in the pipeline and can offer the much-needed push to the gold. Though, likely downside due to the surprise negatives from Brexit and/or US aid package negotiation desk can’t be ruled out.
Technical analysis
Although an ascending trend line from November 30 offers immediate support around $1,830, the metal’s sustained trading below 21-day SMA and 50-day SMA, currently around $1,843 and $1,876, portrays the underlying weakness in momentum. As a result, gold sellers targeting a re-test of 200-day SMA, at $1,808.50 now, stay hopeful.
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