Gold Price Analysis: Bulls treading on thin ice at critical support

The price of the yellow metal is trading at $1,866.66 and has travelled between a low of $1,852.79 and a high of $1,874.11.

Gold has been under pressure in recent day's, falling from the $1,960s as investment flows to the yellow metal hit their biggest slump since the Covid-19 liquidations, despite a softer US dollar.

The precious metal is cascading to the deflationary forces from lockdowns and a reversal in safe-haven flows from the vaccine announcement, as noted by analysts at TD Securities. 

Record infection numbers have prompted US schools and businesses to close their shutters once again, thwarting the world's largest economy's recovery from the deepest recession since the Great Depression. 

With additional fiscal relief on the congressional back burner and investors looking to the Federal Reserve in December for signs it could step in with more monetary stimulus.   

''It is worth recalling that the driver of investment flows into precious metals has ultimately been sourced from a powerful impulse lower in real rates,'' the TD Securities analysts explained.

''In this lens, the vaccine will ultimately be a boon for gold bugs, helping strengthen inflation expectations without immediate implications for central bank policy.''

Gold levels

''While gold bugs are anxiously hoping prices hold north of the $1850/oz trendline, a break below could catalyze another positioning squeeze which would asymmetrically tilt the balance of risks to the upside,'' the analysts at TD Securities argued.