Gold Price News and Forecast: XAU/USD bears keep reins below $1,900 amid US dollar strength

FXStreet Team FXStreet

Gold Price Analysis: XAU/USD stalls within bull flag at weekly resistance

The price of gold is trading at $1,867.52, down some 0.5% on the day having travelled between $1,860.82 and $1,884.33.

Holiday-thin markets on a shortened week are making for unusual price behaviour across the spectrum of instruments, not least in the precious metals arena.

However, the US dollar is perky within its corrective phase within the fresh bearish cycle and despite the passage of a new $900 billion stimulus package.

Following weeks of negotiations, Congress overwhelmingly approved billions of dollars for American households and businesses that have been hurt by the pandemic.

Gold Price Analysis: XAU/USD bears keep reins below $1,900 amid US dollar strength

Gold prices hold lower ground near $1,860 amid the early Wednesday morning in Asia. The yellow metal dropped the most since December 09 amid broad US dollar strength. While the greenback benefited from the passage of the US coronavirus (COVID-19) aid package and broad risk-off mood, sentiment remains downbeat as Brexit deadlock prevails while markets worry from the fresh covid variant.

Although major market chatters blame risk-off for the latest surge in the US dollar index (DXY), other reasons also contribute to the greenback’s strength. Firstly, the passage of the US covid aid package and government funding with nearly $2.3 trillion amount in total suggest that the world’s largest economy will have a good start to 2021. Secondly, hopes that America will be in better shape under Joe Biden’s leadership also back the greenback. Additionally, other developed economies like Europe and the UK are jostling with Brexit whereas China has less acceptance in the West, which in turn direct market players towards the USD.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.