During Monday’s Asian trading session, the yellow metal prices failed to maintain their overnight bullish streak. They edged lower around the $1,855 level mainly due to the risk-on market sentiment, which tends to weaken the safe-haven yellow-metal prices as investors continuing a retreat from the safe-haven asset after renewed progress in U.S. stimulus measures.
Despite the ever-increasing infections of the covid strain outside the epicenter of Britain and South Africa, the market trading sentiment managed to stop its overnight negative performance and started to flash green on the day amid renewed hopes for additional U.S. fiscal stimulus measures. These hopes were triggered instantly after the incoming chairman of the U.S. Senate Budget Committee said that Democrats would use a rare procedural tactic to pass major parts of a Covid-19 relief package if Republicans refuse to move on the measure. In addition to this, the optimism over the rollout of vaccines for the highly infectious coronavirus disease was also exerting a positive impact on the market trading sentiment. As a result, the S&P 500 Futures print 0.20% intraday gains by press time of Asian session on the day.
At the USD front, the broad-based U.S. dollar failed to stop its long bearish bias and dropped further on the day as demand for the safe-haven assets declined amid progress toward agreeing on U.S. fiscal stimulus. Conversely, the declines in the U.S. dollar could be short-lived or temporary as the fresh COVID-19 worries and weak European economic data helps the safe-haven assets to stop t its bearish rally.
Gold traded in line with our forecast to test the support area of 1,850 level, but soon it started forming candles upward, supporting bullish reversal in the precious metal. Thus, we decided to close the trade manually with +28 pips. Soon we will open another position in gold to secure the next trade; let’s stay tuned. Good luck!