Gold Price Analysis: XAU/USD bulls again attack $1,950 as markets look for clear direction

Gold picks up the bids near $1,950 during the pre-Tokyo open Asian trading on Friday. The yellow metal recently took a U-turn from $1,945.20 despite failing to cross $1,955 twice during the previous day. Even so, the bullion extends the previous day’s gains to recovery Wednesday’s heavy losses that recalled $1,930 level.

While searching for the catalysts, it becomes unclear as to whether the US dollar’s pullback from one-week high was the main reason for gold’s run-up or the US-Iran tension, not to forget the latest recovery in the odds suggesting Sino-American trade talks. Additionally, the coronavirus (COVID-19) woes and hopes of further stimulus from the US also joins the list of catalyst to confuse researchers.

Bulls keep the reins amid mixed plays…

During the previous day, the US dollar index (DXY) reversed the initial gains while taking a U-turn from a one-week top of 93.24. The following downside defied Wednesday’s run-up while flashing a daily negative closing on the face of the greenback’s gauge versus the major currencies.

Downbeat US Jobless Claims and Philadelphia Fed Manufacturing join the recent US-Iran tussle to drag the American currency back from August 14 high. Alternatively, a pullback from the multi-month low and hopes of serious COVID-19 aid package talks between the Republicans and Democrats seems to have favored the greenback earlier.

Recently, fears of a fresh lockdown in the UK’s Birmingham and wider virus wave 2.0 in the US gained momentum to push the safe-haven demand. Further, US Secretary of State Mike Pompeo’s warning to use all means to force the United Nations (UN) arms embargo over Iran also escalates the rush to risk-safety.

Against this backdrop, Wall Street marked mild gains but the US 10-year Treasury yields closed in negative around 0.65% by the end of Thursday’s North American session. However, the S&P 500 Futures take rounds to 3,385, up 0.10% on a day, by the press time.

With the preliminary readings of August month PMIs up for publishing on the calendar, traders will have an active day ahead. It should be noted that anticipated strength in the numbers could challenge the bullion’s strength.

Technical analysis

While $1,924 could be considered as immediate support, 50-day EMA near $1,882 will be the strong level to watch during the quote’s further downside. On the contrary, the bulls are likely to remain cautious unless breaking the monthly resistance line, currently around $1,989.