Gold Price Analysis: XAU/USD struggles for direction, flat-lined around $1850-55 region


  • Gold struggled to preserve its intraday gains and started retreating from the $1862 region.
  • The underlying bullish sentiment was seen as a key factor weighing on the safe-haven metal.
  • Retreating US bond yields kept the USD bulls on the defensive and should help limit losses.

Gold seesawed between tepid gains/minor losses through the first half of the European session and remained confined in the previous session's trading range. The commodity was last seen hovering around the $1855-56 region, nearly unchanged for the day.

A combination of diverging forces failed to provide any meaningful impetus to the precious metal, instead led to a subdued/range-bound price action on Wednesday. The ongoing pullback in the US Treasury bond yields kept the US dollar bulls on the defensive. This was seen as a key factor lending some support to the dollar-denominated commodity.

The recent strong rally in the US bond yields lost steam in reaction to the strong demand seen at a $38 billion 10-year auction overnight. Adding to this, the Fed officials reiterated that the monetary policy is going to remain accommodative, which, in turn, extended some additional support to the non-yielding yellow metal and helped limit the downside.

The Democratic sweep in the crucial US Senate runoff elections in the state of Georgia raised expectations that President-elect Joe Biden would push for a multi-trillion-dollar stimulus package. This sparked a bond-market selloff and pushed the yield on the benchmark 10-year US government bond to ten-month highs on Tuesday.

Meanwhile, the supporting factors, to a larger extent, were negated by the underlying bullish sentiment in the global financial markets. The risk-on mood kept a lid on any meaningful upside for the safe-haven XAU/USD. The risk sentiment remained well supported by hopes for a strong global economic recovery and more US fiscal stimulus in 2021.

Apart from this, the rollout of vaccines for the highly contagious coronavirus disease helped offset worries about the continuous surge in new cases worldwide and might further boost investors' confidence. Hence, the path of least resistance for the XAU/USD remains on the downside and any attempted positive move might be seen as a selling opportunity.

Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. This, along with the US bond yields, might influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment to grab some opportunities around the XAU/USD.

Technical levels to watch

XAU/USD

Overview
Today last price 1855.63
Today Daily Change -0.29
Today Daily Change % -0.02
Today daily open 1855.92
 
Trends
Daily SMA20 1885.9
Daily SMA50 1866.92
Daily SMA100 1890.73
Daily SMA200 1841.42
 
Levels
Previous Daily High 1863.83
Previous Daily Low 1836.74
Previous Weekly High 1959.42
Previous Weekly Low 1828.27
Previous Monthly High 1906.87
Previous Monthly Low 1775.52
Daily Fibonacci 38.2% 1853.48
Daily Fibonacci 61.8% 1847.09
Daily Pivot Point S1 1840.5
Daily Pivot Point S2 1825.07
Daily Pivot Point S3 1813.41
Daily Pivot Point R1 1867.59
Daily Pivot Point R2 1879.25
Daily Pivot Point R3 1894.68

 

 

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