Gold Price Analysis: XAU/USD wobbles near five-month low below $1,800 as Powell, Mnuchin weigh on risks
|- Gold bears catch a breather around the lowest since July-start.
- Economic fears, need for stimulus raise bars for the bull’s entry.
- China data, RBA can offer immediate direction, risk catalysts to remain as the key.
Gold prices seesaw around $1,77/78 during the early Tuesday morning in Asia. The yellow metal dropped to the lowest since July the previous day before bouncing off $1,764.73. The quote’s latest moves take clues from the downbeat comments of the Fed Chair Jerome Powell and US Treasury Secretary Steve Mnuchin. Though, coronavirus (COVID-19) vaccine hopes battle the bulls amid mild risk-off mood.
Powell-Mnuchin duo highlights the need for stimulus…
In their prepared remarks for today’s testimony in front of the Senate Banking Committee, Fed’s Powell and Treasury Secretary Mnuchin both emphasized that the economy is on the path to recovery but needs additional to stay on track. While Powell cited moderated growth as a fear to dim the vaccine hopes, Mnuchin urged Congress to use $455 billion from the CARES Act to present the much-needed stimulus to the world’s largest economy.
While comments from the US weigh on risks, the US dollar index (DXY) also stopped its recovery moves from the lowest since April 2018 after the release. It should also be noted that the S&P 500 Futures drop 0.15% by press time.
During the previous day, fears that the global economy is likely to print soft numbers in Q4 2020 joined hands with uncertainty over Brexit and the US stimulus to weigh on the risk sentiment. Also challenging the mood could be the Western tussle with China.
Although risk catalysts are likely to keep gold sellers hopeful, China’s November month Caixin Manufacturing PMI and monetary policy meeting from the RBA can offer intermediate moves during the Asian session. Following that, market players will be interested in the US ISM Manufacturing PMI for November and actual comments from the Fed Chair’s Testimony for fresh impetus.
Technical analysis
Having bounced off May’s high, gold can take clues from the oversold RSI conditions, on the daily chart, to eye the $1,800 threshold. Though, July 07 top near $1,818 may probe the metal’s further upside.
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