Gold Price Analysis: XAU/USD keeps mild gains above $1,900 amid stimulus hopes
- Gold reverses the pullback from $1,914 while bouncing off $1,906.
- US policymakers struck upbeat statements despite failing to match the deadline to offer relief package details.
- Coronavirus (COVID-19) woes tighten grip in Europe, US-North Korea, Sino-American tussles renew.
- All eyes on the US aid package talk even as calendar events pick-up pace.
Gold prices rise to $1,913, up 0.36% intraday as markets in Tokyo open for Wednesday’s trading. The yellow metal benefited from the broad US dollar weakness, amid hopes of the American COVID-19 stimulus, during the previous day. The optimism faded as Congress members failed to meet the Tuesday-end time limit to unveil the details. However, the latest comments from the diplomats suggest that hopes are favoring the much-awaited relief package’s arrival soon.
More clarity on discussions awaits Mnuchin’s return…
Despite failing to agree on the COVID-19 aid package, US House Speaker Nancy Pelosi conveyed her optimism for the deal. The diplomat recently said that the talks with US Treasury Secretary Steve Mnuchin provided more clarity. Though, the White House Chief of Staff Mark Meadows criticized Pelosi for her rigid demand of $2.2 to $2.4 trillion for the package as the root cause of the delay in the stimulus. More talks will resume when Treasury Secretary Mnuchin returns from his trip to the Middle East, expected on Wednesday.
Elsewhere, European countries keep struggling due to the virus as Spain is near to announce a national emergency and the UK is failing to witness any upbeat results from the “Three Tier” lockdown system. The same suggests the return of the national activity restrictions and challenge market sentiment, which in turn can direct traders towards gold as the US dollar remains downbeat ahead of the American Presidential election. Other than the virus woes, Brexit worries and the US tussles with North Korea and China can also offer a mild push to the Risk-off buyers.
Though, the present market sentiment seems positive as S&P 500 Futures and Japan’s Nikkei 225 both print 0.50% gains after Wall Street managed to close in mildly positively.
Looking forward, traders will keep eyes on the relief package updates for near-term direction while comments from the ECB President Christine Lagarde can offer intermediate moves.
Technical analysis
A lower high formation on the daily chart, during the current week, can be ignored until the bullion prices remain above an ascending trend line from September 28, near $1,897 now. As a result, bulls are well-positioned to challenge a falling resistance line from August 18, currently around $1,919.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
