Gold Price Analysis: XAU/USD portrays indecision around mid-$1,800s despite risk-on mood

• Gold fades the previous day’s recovery moves even as $1,836-37 offered latest bounce to the north.
• Wall Street benchmarks, US 10-year Treasury yields cheer hopes of American stimulus, vaccinations.
• US dollar index drops amid risk-on mood, political turmoil over the Capitol Hill issue.
• Fed members’ cautious optimism battles virus woes, ECB President Lagarde Speech and US CPI decorate calendar.

Gold prices seesaw between $1,854-57, currently around $1,855.60, amid the initial Asian session on Wednesday. The yellow metal rose for the first time in the last five days on Tuesday amid the US dollar weakness and risk-on mood. However, a lack of major catalysts during early Asia probe the commodity buyers off-late.

Risk-on battles US political turmoil, virus headlines…

The US Centers for Disease Control and Prevention (CDC) recently announced compulsory coronavirus (COVID-19) testing as well as the negative result for all fliers into the US from January 26. The announcement joins fears of lack of hospitalization capacity emanating from the UK and a downward revision to Japan’s GDP to weigh on the sentiment.

Even so, most of the recent comments from the Fed policymakers suggest welcome economic numbers starting from the second half of 2021. Also positive are the hopes of mammoth fiscal stimulus news from US President-elect Joe Biden, mostly cheered for announcement on Thursday. It should be noted that the upbeat results of the covid vaccinations also favor the market bulls.

Against this backdrop, S&P 500 Futures struggle for a clear direction below 3,800 after Wall Street benchmarks flashed mild gains by the end of Tuesday. Further, the US 10-year Treasury yields remain on the front foot above 1.0% and the US dollar index (DXY) snaps the three-day run-up.

Looking forward, chatters surrounding US President Donald Trump’s impeachment and virus updates can direct immediate moves ahead of speech from the ECB President Christine Lagarde where gold buyers look for further EUR strength to remain positive. Also, December’s Consumer Price Index for the US, expected 1.3% YoY versus 1.2% prior, will be an additional burden on market watchers.

Technical analysis

An area between 200-day SMA and 50-day SMA, including $1,842 and $1,866 levels, seems to restrict gold’s immediate moves with bearish MACD teasing sellers targeting the mid-December low near $1,819.