During Thursday's Asian trading hours, the yellow metal prices managed to stop its previous day losing streak and took some strong 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 U.S. dollar sentiment was being pressured by the possibility of U.S. economic stimulus measures and the 1st-approval of a COVID-19 vaccine, which urge investors towards riskier currencies and higher-yielding assets against the safe-haven investment. 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 after the Trump administration issued new guidelines restricting travel to the U.S. by members of the Chinese Communist Party, 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 1,832.25 and consolidating in the range between 1,826.17 - 1,837.36.
However, the global markets' sentiment failed to extend its early-day positive performance and turned sour amid renewed Sino-US tensions and growing coronavirus fears. As per the latest report, the Trump administration announced fresh travel restrictions on the Chinese Communist Party members and their families, 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. Thereby, 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 90.993.
On the contrary, the global risk sentiment losses were capped by the latest optimism over the first approval of a COVID-19 vaccine. It should be noted that the U.K. became the 1st-country to approve a vaccine jointly developed by Pfizer and BioNTech. In the meantime, the probability of more U.S. fiscal stimulus measures further boosted market trading sentiment and was seen as a key factor that kept the lid on any additional gains in the gold prices.
Looking forward, the market traders will keep their eyes on the Unemployment Claims and the Final Services PMI for fresh directions. In addition to this, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will not lose their importance.
Daily Support and Resistance
Pivot Point 1823.65
The yellow metal gold (XAU/USD) has traded in line with our previous forecast. Gold tested the resistance mark of 1,831 and the continuation of a bullish bias can lead its price towards the next resistance area of the 1,842 level. The precious metal may gain support at the 1,826 level today. Bearish correction can be seen until 1,826 level while bounce off can be seen over this level today. good luck!