During Monday's Asian trading session, the yellow metal prices succeeded in stopping its early-day losing streak and took some modest bids in the last hour around above the $1,840 level. However, the bullish tone around the gold prices could be associated with the broadly weaker U.S. dollar as the price of gold is inversely related to the U.S. dollar price.
However, the U.S. dollar was being pressured by the disappointing U.S. jobs data, which eventually raised expectations of fresh U.S. economic stimulus measures and undermined the U.S. currency. Apart from this, the latest chatters concerning the US-China tussle keep undermining the market risk tone, which also helped the safe-haven metal to stay bid.
In the meantime, the intensified concerns over the U.S. economic recovery, witnessed after the disappointing U.S. jobs data released on Friday, has also played ts major role in underpinning the gold prices. Elsewhere, the long-lasting jitters over the Brexit trade talks remain on the card, which also put a bearish impact on the market trading sentiment and became one of the key factors that helps the safe-haven yellow metal prices to stay bid. On the contrary, the optimism over a potential vaccine for the highly contagious coronavirus disease becomes the key factor that kept the lid on any additional gains in the yellow metal prices. The yellow metal prices are currently trading at 1,840.64 and consolidating in the range between 1,833.12 - 1,842.54.
Despite the optimism over the potential vaccine for the highly infectious coronavirus disease, the market trading sentiment failed to extend its overnight positive performance and turned negative while ending the Asian session amid the combination of factors. Be it the worrisome headlines concerning Brexit or the tension between the US-China, not to forget the coronavirus issues in the U.S. and Europe, everything has been weighing on the market trading sentiment. The coronavirus (COVID-19) resurgence in Europe and the U.S. is picking up further pace, which keeps fueling the doubts over economic recovery as the U.S. and Europe's authorities keep announcing back to back restrictions over activities. As per the latest report, Los Angeles recorded another record high in coronavirus cases.
In the meantime, the restrictions in California call for bars and tattoo and hair salon shops to close again. Across the Pond, Bavaria's southern German region declared that it would impose a stronger lockdown from Wednesday until Jan. 5, whereas the South Korean authorities strengthened social distancing rules for the capital Seoul and surrounding areas.
In addition to the U.S., Europe also imposed a lockdown again last week, threatening the European economic recovery as the back-to-back lockdown restrictions will have an instant negative effect on daily activities. This, in turn, kept the market trading sentiment under pressure and helped the safe-haven assets to stay bid.
Across the Pond, the tensions between China and the U.S. kept gaining market attention and challenged the market risk tone. As per the latest report, the Trump administration recently showed willingness for further sanctions on the policymakers from China's Communist Party (CCP), which might fuel the already intensified fight among them. These conflicting headlines help the safe-haven metal prices by increasing the safe-haven demand in the market.
Elsewhere, the U.K. and European Union (E.U.) policymakers still do not show any clues over the much-awaited Brexit deal amid key issues like fisheries. Anyhow, the UK PM Boris Johnson and the European Commission (E.C.) President Ursula von der Leyen will discuss key concerns for the 2nd- time in the last three days.
Despite the risk-on market sentiment, the broad-based U.S. dollar failed to gain any positive traction and came under some selling pressure on the day amid disappointing U.S. jobs data, which raised expectations of fresh economic stimulus measures and undermined the U.S. currency. Moreover, the U.S. dollar losses could also be associated with the COVID-19 infection rising rates in the U.S. and Europe, which keep fueling the doubts over the U.S. economic recovery. However, the U.S. dollar losses become the key factor that helps the gold prices to stay bid as the price of gold is inversely related to the price of the U.S. dollar. Meanwhile, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.03% to 90.767 by 9:43 PM ET (1:43 AM GMT).
The U.S. economy added the lowest workers at the data front since May, with non-farm payrolls increasing by 245,000 in November. Manufacturing payrolls increased by 27,000 in November, lower than both the 43,000 reading in forecasts and October's 33,000 increase. In the meantime, the unemployment rate dropped to 6.7%, below the forecast 6.8% and October's 6.9% rate. However, this dissipating data showed that employment recovery is losing pace as the U.S. continues to battle the 3rd-wave of COVID-19 cases. This, in turn, makes investors hopeful that the disappointing data will be a push for Congress to pass the latest round of stimulus measures to support the economic recovery.
On the contrary, the optimism over treatment for the highly infectious coronavirus becomes the key factor that helps the market trading sentiment stop its bearish rally, leading to losses in the safe-haven metal. The hopes of vaccine fueled further after the reports suggesting that the U.K.is set to become the 1st-country to roll out BNT162b2, the COVID-19 vaccine developed by Pfizer Inc (NYSE: PFE) and BioNTech SE (F:22UAy), this week.
In the absence of the key data/events on the day, the market traders will keep their eyes on RBA Gov Lowe Speaks. In addition to this, the updates about the U.S. stimulus package will also be key to watch. In the meantime, 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 1838.6
Gold is trading sidelong at the 1,841 level, producing a critical resistance mark of 1,847. Gold can present selling bias beneath the 1,847 mark, while upward violation of the 1,847 level can extend the buying trend to the 1,883 mark. On the lower side, the support can be located around 1,828 level. The irregular session can be seen ahead. Good luck!