Home Forex Market Analysis Forex Signals Gold’s Choppy Session Continues – Brace for Breakout Setup!

Gold’s Choppy Session Continues – Brace for Breakout Setup!


The yellow metal prices managed to stop its previous session bearish bias and started to gain positive traction around the $1,874 level, mainly due to the prevalent selling bias surrounding the U.S. dollar. That was triggered by the downbeat U.S. data, which fueled the doubts that the U.S. economic recovery could be halt. Apart from this, the upbeat market mood also undermined the demand of the U.S. dollar. Thus, the weaker U.S. dollar could be seen as one of the key factors that helped the dollar-denominated commodity.

On the contrary, the market risk-on sentiment, backed by the optimism over the coronavirus (COVID-19) vaccine/treatment and the hopes of the COVID-19 stimulus measures package, becomes the key factor that kept the lid on any additional gains in the gold prices. Across the pond, the market trading sentiment was relatively unaffected by the Sino-American tussle and virus woes, which might lend some further support to the safe-haven metal. The yellow metal prices are currently trading at 1,874.13 and consolidating in the range between 1,861.93 – 1,875.20.

The renewed optimism over a possible vaccine for the highly infectious coronavirus pandemic boosted the market risk tone on the day. These hopes were fueled after Novavax Inc started a clinical late-stage trial of the coronavirus vaccine in the U.K. The experimental vaccine is produced on partnership terms with the government’s Vaccines Taskforce. This, in turn, weakened demand for safe-haven metal and might keep a lid on any extra gains for the yellow metal.

Moreover, the risk-on sentiment was further bolstered by the latest headlines suggesting that the Democrats in the U.S. House of Representatives stated that they are working on a $2.2 trillion COVID-19 stimulus package that could be voted on next week. Besides this, there is also a suggestion that House of Representatives Speaker Nancy Pelosi and U.S. Treasury Secretary Steven Mnuchin will likely resume stalled stimulus talks.

As in result, the broad-based U.S. dollar failed to maintain its previous day gains and dopped on the day mainly due to the risk-on market sentiment. Moreover, the U.S. dollar losses could also be attributed to the downbeat U.S. unemployment data. However, the U.S. dollar losses kept the gold prices higher as the price of gold is inversely related to the price of the U.S. dollar.

Across the ocean, the fears of no-deal Brexit and the Sino-American tussle keep challenging the positive market tone, which might help the yellow-metal prices. At the US-China front, Sino-US’s tensions picked up further pace after the US Justice Department urges judge to allow Govt to ban WeChat from app stores. As per the latest report, the US Justice Department early Friday urged a San Francisco federal judge to permit the government to prohibit Apple Inc and Google from offering WeChat for download in the app store. At the coronavirus front, the on-going rise in COVID-19 cases globally continues to fuel worries that the global economic recovery could be halt.

Daily Support and Resistance
S1 1792.71
S2 1832.06
S3 1847.65
Pivot Point 1871.4
R1 1887
R2 1910.75
R3 1950.1

The yellow metal gold extends to trades choppy on the back of thin fundamentals in the market. The Doji candle formation on the daily timeframe is expected to encourage upward movement in the market unto the 23.6 Fibonacci retracement level of 1,877. On the upward side, the bullish violation of 1,877 marks may lead to a 38.2% Fibo level of 1,895. Beneath 1,877, the gold price can sink until 1,858 and 1,846 level. Neutral bias controls in the market today. Good luck!


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