Gold: Mildly weak above $1,600 amid mixed signals for US stimulus package

• Gold extends the pullback from the two-week top.
• Uncertainties surrounding the US COVID-19 Bill, pessimism concerning the pandemic weigh on the risk-on tone.
• US dollar weakness helps the buyers to remain hopeful.
• US data, aid package headlines will be the key to follow for fresh impulse.

Having slipped from the two-week top, gold prices drop to $1,612, down 0.26%, amid the initial Asian session on Thursday. Although broad US dollar weakness and the recent recovery in the market’s risk-tone seem to please the buyers, challenges to the US aid package as well as pandemic details keep the commodity under pressure.

Despite agreeing over the estimated $2.2 trillion Coronavirus (COVID-19) Bill, Fox News suggests the US policymakers are jostling over the details. While US President Donald Trump and Treasury Secretary Steve Mnuchin tried to sell their efforts and signaled the voting tonight, the House Leader Nancy Pelosi said that she does not think House can pass stimulus bill under unanimous consent. The diplomat also mentioned that the house will give its members at least 24 hours' notice before voting on economic relief bill.

On the other hand, US President Trump, in his latest Coronavirus Task Force Briefings, conveyed worries for New York while the pandemic numbers from the UK, as well as British response to lockdown, seem to challenge the market’s trade sentiment.

Furthermore, the US Health official Fauci said coronavirus could become seasonal, cyclical and the US needs to be prepared for that.

Elsewhere, there are at least 6 clinical trials underway evaluating Remedesivir, a likely solution to the deadly virus.

While portraying the risk tone, the US 10-year treasury yields stay positive around 0.87% while the US stock futures register mild gains of near 0.15% after Wall Street’s second day of positive closing.

Traders are likely to focus on the US aid package news as well as the virus headlines for fresh impulse amid a lack of data ahead of the US session. Though, the US jobless claims will be the key to watch during that time. “The market will watch US weekly initial jobless claims closely to gauge the impact of COVID-19 on employment. Claims are expected to skyrocket from 281k in the week to 14 March, with a median forecast for 21 March of 1640k, but forecasts as high as 4 million (Citigroup and Oxford Economics),” said Westpac.

Technical analysis

A confluence of 21 and 50-day SMA can limit the bullion’s short-term downside near $1,592/88 while buyers will wait for a clear break above $1,640 to target February month high to aim for $1,660 and $1,680 numbers to the north.