Gold Price Analysis: XAU/USD needs fresh push to excel beyond $1,900

Gold eases from the intraday high around $1,909 to $1,907.62 amid the initial Asian session on Friday. In doing so, the yellow metal probes the previous two days’ recovery moves amid consolidation in risk sentiment. Though, the latest pullback doesn’t clear the bullion’s earlier rise on safe-haven demand, mainly backed by the lack of stimulus from the US and the coronavirus (COVID-19) worries emanating from Europe. Also in the line are Brexit headlines and the recent US-China tension.

No worries for the bulls…

Even if the US dollar index (DXY) surged to the highest in three weeks on Thursday, gold prices, which generally have a negative correlation with the greenback, didn’t weaken. The reason could be spotted from the ballooning amount of global debt with negative yields, as spotted by macro analyst Holger Zschaepitz. With the precious metal carrying zero holding cost and a shield to inflation, traders seem to take solace while gradually cutting the previous two months’ downbeat performance.

While searching for clues, the US policymakers’ inability to offer the much-awaited COVID-19 stimulus and the record weekly surge in European virus numbers could be marked as the key catalysts. Although US House Speaker Nancy Pelosi recently assured that the “relief will not wait until January'', there is no notable progress in the talks that have been stuck for weeks, which in turn highlight fears of no aid package before the next month’s presidential election. Further, cities in France and the London area have called for the strictest activity restrictions while witnessing a near 20,000 number whereas figures from Germany marked the record high additional daily while calling for fresh local lockdown measures.

The Brexit stalemate between the European Union (EU) and the UK policymakers continues to during the on-going EU Summit. German Chancellor Angela Merkel recently said, “talks on Brexit have been intensive, constructive.” Though, this came only after UK PM Boris Johnson’s October 15 deadline expired. Elsewhere, China openly threatens the US to step back from Taiwan Strait while also adding Aussie cotton to its “NO” Australian goods’ list.

Amid these plays, S&P 500 Futures seesaws around 3,480/75, mildly up, after Wall Street’s another negative closing.

Moving on, the economic calendar in Asia is mostly silent, which in turn highlights the risk catalysts to be watched for fresh impulse.

Technical analysis

Unless crossing the $1,927-30 area comprising 50-day SMA and a falling trend line from August 18, gold bulls are likely to remain probed. Though, sellers may also struggle before witnessing a daily close below an ascending trend line from September 28, at $1,897 now.