During Wednesday's Asian trading session, the yellow metal prices extended its previous-session bullish rally and remained well bids around above the $1,800 level. However, the bullish sentiment around the gold prices could be associated with the broadly weaker U.S. dollar. The risk-on market sentiment undermined that.
In the meantime, the doubts over the U.S. economic recovery from COVID-19 also played its major role in undermining the greenback. Thus, the declines in the U.S. dollar could be considered one of the key factors that kept the gold prices higher as the price of gold is inversely related to the U.S. dollar price. Apart from this, the rise in the coronavirus (COVID-19) numbers in the U.K. and Europe also favoring the yellow-metal bulls. In addition to this, the U.S. geopolitical tension with the west provided an additional boost to the safe-haven metal prices. On the contrary, the optimism over a potential vaccine/treatment for the highly infectious coronavirus and smooth start of President-elect Joe Biden's transition to the White House keep the market trading sentiment bullish, turned out to be one of the key factors that limit further upside momentum for the bullion prices. The yellow metal prices are currently trading at 1,809.45 and consolidating in the range between 1,801.81 - 1,812.24.
Despite the on-going Sino-US tussle and worries over the coronavirus (COVID-19) cases, the market trading sentiment extended its previous-day positive performance and remained supportive by combining factors. Hence, the reason for the risk-on market trading sentiment could be attributed to the latest optimism over a possible early rollout of vaccine for the highly infectious coronavirus disease. Apart from this, the soft start of President-elect Joe Biden's transition to the White House as well as the reports that former Fed Chair Janet Yellen could become the next U.S. Treasury Secretary added further positive impact on the market trading sentiment, which turned out to be one of the key factors that limit further upside momentum for the bullion prices.
As in result, the broad-based U.S. dollar failed to stop its previous day's declining streak and remain depressed on the day mainly due to the risk-on market sentiment. Moreover, the U.S. dollar losses could also be associated with doubts over the U.S. economic recovery from COVID-19. 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. Meantime, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies fell by 0.17% to 92.067 by 11:55 PM ET (3:55 AM GMT).
Across the ocean, the tensions between the U.S. and China and the surge in the coronavirus (COVID-19) numbers in the U.K. and Europe keep challenging the market risk-on tone and becomes the key factor that helps the gold prices to stay bid.
Looking ahead, the market traders will keep their eyes on the U.S. economic calendar, which will show the releases of the U.S. Preliminary Q3 GDP, Initial Jobless Claims, Durable Goods, and Core PCE Index. This data will likely influence the USD price dynamics and help traders to take some fresh directions. All in all, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance.
Daily Support and Resistance
Pivot Point 1813.77
The yellow metal, GOLD, shifted distinctly from the 1,832 mark to 1,790, accommodating beneath an immediate resistance range of 1,832. Closing of candles beneath the 1,832 mark is expected to trigger an additional selling trend unto the next support mark of 1,794. In the 2-hour chart, gold has disrupted the symmetric triangle pattern, prompting an intense bearish move in the market. The RSI and MACD are in support of the selling bias. Let’s consider lingering bearish beneath the 1812.87 mark today, and bullish trade over 1812.87 should be favored. Good luck!