Gold rises 0.3%, but the market still looks indecisive
|- Gold still locked in Monday's indecisive price range.
- Worsening of risk aversion may yield a range breakdown.
Gold is trading near $1,7861 per ounce at press time, representing a 0.3% gain on the day.
However, the yellow metal is still stuck in the indecisive price range of $1,847 to $1,868, marked by Monday's Doji candle. A close above $1,868 would imply a bullish breakout, while $1,847 is the level to beat for the sellers.
A downside break could be seen if the risk aversion signaled by the current 0.3% decline in the S&P 500 futures worsens during the day ahead, strengthening the bid tone around the anti-risk US dollar. The greenback is gold's biggest nemesis. At press time, the dollar index is hovering largely unchanged on the day near 90.36.
The risk sentiment has weakened seemingly due to skepticism about the new US President Joe Biden's ability to get the ambitious $1.9 trillion stimulus package approved by Congress. The fading prospects of fiscal stimulus, which is known to boost inflation, also weakens the case for investing in the store of value assets such as gold.
However, the losses are likely to be shallow and could be short-lived as the Federal Reserve would have to do the heavy lifting if the US Congress does not approve the fiscal stimulus. On Wednesday, the central bank is likely to push against any notion of a premature trimming of monetary stimulus.
Technical levels
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