Gold: Recapturing $1887 is critical for the bulls

FXStreet Team FXStreet

Gold (XAU/USD) plunged 5% and hit the lowest in six weeks at $1850 in Monday’s trading after Covid vaccine optimism lifted economic recovery hopes and downed stimulus demand. The yellow metal is set to remain at the mercy of risk sentiment and US dollar dynamics, FXStreet’s Dhwani Mehta briefs.

Key quotes

“Pfizer Inc said its COVID-19 vaccine, developed with German partner BioNTech SE, was more than 90% effective in preventing infection. The rally in Treasury yields fuelled the demand for the US dollar and weighed heavily on the yellow metal, as markets reassessed the need for additional stimulus from the Fed and Congress.”

“Gold is attempting a dead cat bounce so far this Tuesday, heading back towards the $1900 mark, as the Treasury yields retrace some of the previous gains and stall the dollar’s advance. The market mood has turned tepid probably on reports that China’s COVID-19 vaccine trial halted in Brazil due to death while the producer Sinovac is investigating the cause of the halt.”

“Amid a lack of significant macro news from the US docket in the day ahead, the broader market sentiment and dollar’s price action will be closely followed by gold traders. Also, a speech by President-elect Joe Biden, due at 19:00 GMT, will remain in focus.”

“Gold challenges the bearish 21-hourly moving average (HMA) hurdle at $1887 on its road to recovery from multi-week troughs. Recapturing 21-HMA is critical for the bulls, with the next upside resistance seen at the horizontal 200-HMA at $1902.”

“On the flip side, acceptance below the key support at $1849, September 28 low, could revive the correction from record highs of $2075.”

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FXStreet Team

FXStreet

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