Gold Price Analysis: XAU/USD stays pressured below $1,950
- Gold began the week mostly unchanged around $1,940 before probing $1,930.
- US dollar strength, vaccine hopes and equity gains exert downside pressure.
- Bulls stay hopeful as cases in Europe rise off-late, US policymakers jostle over aid package.
- A lack of major data keeps risk catalysts in the spotlight.
Gold drops to $1,931 amid the early Monday morning in Asia. The yellow metal flashed the second consecutive weekly loss while closing around $1,940 on Friday. The US dollar’s pullback from the multi-month low could be considered as the major reason for the bullion’s latest weakness. Additionally, Wall Street’s gains and market’s wait for the key events also probe the bulls after they stepped back from the record high.
Bears cheer even small news, bulls await a major push…
US President Donald Trump’s latest comments suggesting the authorized emergency use of convalescent plasma could be considered as the latest push to the commodity bears. The news strengthens vaccine hopes. The update becomes additionally important considering the recently receding coronavirus (COVID-19) numbers from the US and Australia. However, the strong bounce-back of the virus in Germany, France and Spain keeps the risk aversion on the table.
On the other hand, US President Trump keeps attacking (verbally) China with the latest comments, shared by Fox Business News, suggesting the possibility of decoupling the US economy from China. Even so, the hopes of the phase-one deal talks stay on the policymakers’ chart and hence keep the risks a little lower.
Elsewhere, the US policymakers are yet to finalize when they will start negotiating the COVID-19 aid package. The recent hurdle came from the Democratic Party wherein House Speaker Nancy Pelosi took a U-turn from her previous readiness to cut the demands in half. It’s worth mentioning that the US data have been positive off-late, PMIs and Existing Home Sales being the latest, whereas numbers from the rest of the globe haven’t been quite impressive.
Against this backdrop, S&P 500 Futures gain 0.15% after the Wall Street benchmark flashed the biggest run-up of the year 2020, with consecutive four weeks of rising.
While no major data/events are up for release on Monday, the Jackson Hole Symposium, up for Thursday and Friday, will be the key for the week. Also, the American policymakers are eyed for any decision on the stimulus and hence traders are holding their breath for fresh impetus.
Technical analysis
A short-term symmetrical triangle formation between $1,925 and $1,974 restricts gold’s immediate moves with bearish MACD favoring the sellers.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
