- Gold prices stay depressed after dropping to the fresh low since July 21.
- Market sentiment bolsters on formal transition powers to US President-elect Joe Biden.
- Odds of ex-Fed Chair Yellen’s Treasury Secretary role and vaccine hope are extra positives.
Gold drops to the fresh multi-month low of $1,826.53, down 0.35% intraday, during early Tuesday. The yellow metal recently took offers as US President Donald Trump flashed signs to formally shift powers to Joe Biden. Also favoring the risks could be the chatters concerning Biden’s team and the coronavirus (COVID-19) vaccines.
Although hesitantly, Trump ordered General Services Administration (GSA) to begin the process of opening the White House gates for the recently elected President Biden. This helps the Democrats to escalate the talks surrounding the COVID-19 aid package while also rushing the moves to prepare a sound team to battle the covid woes.
That said, early signals suggest Janet Yellen be the next Treasury Secretary while Antony Blinken to be the next US diplomats.
It should also be noted that the recent progress in the COVID-19 vaccine and their government approval backs hopes that the virus will be tamed sooner than later, which in turn favors the risk-on mood.
However, talks that the US is forming a trade group with Western allies to combat China joins the fears of further economic damages due to the virus, until the vaccine arrives, to probe the market optimism.
That said, S&P 500 Futures gain half a percent while stocks in Asia-Pacific mark notable upside by press time.
Looking forward, updates from the US politics and virus news will be the key catalysts for the gold traders to watch. It should, however, be noted that the gold prices are likely to bear the burden of further optimism.
Technical analysis
Having broken September lows on a daily closing, gold prices are declining towards the early July top near $1,818.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Latest Forex News
Editors’ Picks
EUR/USD: Bears hold the grip, critical challenge at 1.2000
The greenback firmed up at the end of the week, closing it with substantial gains against most major rivals. Renewed coronavirus concerns and poor macroeconomic data spurred risk-off. EUR/USD is firmly bearish.
GBP/USD: Further restrictions in the UK may hit the pound
The GBP/USD pair trimmed most of its weekly gains on Friday and settled in the 1.3580 price zone, amid risk-off fueling dollar’s demand. UK GDP contracted by less than anticipated in November, Industrial Production plunged.
Gold: Further decline toward $1,800 remains on the cards
Gold failed to stage a convincing rebound this week. After losing more than 2% in the previous week, the XAU/USD pair extended its slide on Monday and touched its lowest level since early December at $1,817.
Darkest fefore dawn
The upcoming economic news is likely to be dreadful, and if it is not dreadful, it will be mostly ignored. This includes the release of the preliminary January PMI figures at the end of the week. Japan is extending its national emergency to another five prefectures, which collectively account for over half of the nation's GDP.
DXY breaks above key downtrend, eyes move above 91.00
USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.