The yellow metal prices managed to stop its previous day losing streak and took some modest bids around well above the $1,830 level mainly due to the broad-based U.S. dollar weakness, which tends to underpin the gold prices as the price of oil is inversely related to the price of the U.S. dollar. However, the sentiment around the U.S. dollar was being pressured by the optimism over the coronavirus vaccine and the probability of U.S. economic stimulus measures, which urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset.
Across the pond, the downbeat market trading sentiment, driven by the worsening coronavirus (COVID-19) conditions in the U.S. and Europe, also keeps the gold prices well bid. Apart from this, the equity markets’ losses were further bolstered by the US-China tussle, which eventually lends some additional support to the yellow metal prices. On the contrary, the optimism over a possible vaccine and treatment for the highly infectious coronavirus keeps challenging the market risk-off mood, which might cap further upside momentum for the gold prices. The yellow metal prices are currently trading at 1,836.17 and consolidating in the range between 1,833.80 – 1,842.54.
However, the global markets’ sentiment failed to extend its previous-day positive performance and turned sour amid renewed Sino-US tensions and growing coronavirus fears. As per the latest report, America blacklists the Chinese crime boss and some other diplomats from Beijing in an anti-corruption sanction crackdown, which instantly fueled the Sino-US tension and weighed on the market trading sentiment. In addition to this, the U.S. and Europe still not refraining from imposing back-to-back lockdown, which threatening to undermine economic recovery as lockdown restrictions tend to have an instant negative effect on economic activities. In the meantime, the lingering uncertainty over the Brexit trade talks also exerted downside pressure on the global equity market. Thus, all these factors weigh on the market trading sentiment, which could be considered the main factors for the gold on-going bullish moves.
Despite the risk-off-market sentiment, the broad-based U.S. dollar failed to stop its previous session declining streak and remained bearish on the day as doubts persist over the global economic recovery from COVID-19. Furthermore, the U.S. Federal Reserve’s expectations of further monetary easing also weigh on the U.S. dollar. Besides this, the encouraging data from COVID-19 vaccine developers urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset, which eventually leads to losses in the safe-haven U.S. dollar. However, the U.S. dollar losses become the key factor that kept the gold prices higher as the price of oil is inversely related to the price of the U.S. dollar. Meantime, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped to 91.052.
In contrast, the losses in the global risk sentiment were capped by the latest reports suggesting that the U.S. Food and Drug Administration (FDA) will meet later in the day to talk about BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy). While Canada also approved its first COVID-19 vaccine on Wednesday and said inoculations would start next week, which also helps the market sentiment limit its deeper losses.
Daily Support and Resistance
S1 1838.47
S2 1853.58
S3 1861.99
Pivot Point 1868.69
R1 1877.1
R2 1883.8
R3 1898.91
Gold prices dropped amid the greenback’s strength versus another important trading instrument in the nonexistence of any further U.S. fiscal incentive to support the rollback within the coronavirus pandemic. Gold is currently trading at the 1,836 mark, facing immediate resistance at the 1,851 level along with a support level of 1,828 and 1,824. The U.S. Inflation data may help determine further gold trends now; nonetheless, the technical side seems bearish today.
