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· Gold Drops Below $1,900 as Dollar Turns Higher and Stocks Rise

Gold dropped below $1,900 an ounce, heading for a weekly loss, as the dollar turned higher and equity markets rose.

Billion slipped as much as 1.8% in London, as a gauge of the dollar spiked from the day’s low, while stock markets were supported amid hopes for more stimulus. The two Democratic wins in Georgia’s Senate runoffs this week give U.S. President-elect Joe Biden full control of Congress, potentially paving the way for him to push his legislative agenda forward.

Bullion’s had a mixed start to the year after posting the biggest annual advance in a decade. While there’s still plenty of tailwinds -- a raging pandemic, uncertainty over the economic recovery and rising inflation expectations, to name a few -- gains in benchmark Treasury yields this week weighed on the non-interest bearing asset.

Spot gold dropped 1.3% to $1,890 an ounce by 8:26 a.m. in London. Silver, platinum and palladium also declined.

· Gold Price Analysis: XAU/USD off lows, $1900 still at risk ahead of NFP

Gold (XAU/USD) has bounced-off a dip to near the $1906 region, as the bulls attempt a tepid recovery above the 200-hourly moving average (HMA), currently at $1909.

Despite the pullback, gold’s path of least resistance appears to the downside, especially after the price confirmed a rising channel breakdown on the hourly chart in the Asian trades.

Bears eye a break below the critical $1900 level to accelerate the downside. Further south, the previous week low of $1869 could be tested.

Meanwhile, the bearish bias will remain intact so long as the price holds below powerful resistance aligned around $1913, which is the confluence of the bearish 21-HMA and the channel support now resistance.

The next line of defense for the bears is seen at the downward-sloping 50-HMA at $1920.

The Relative Strength Index (RSI) has witnessed an uptick in the last hour, although remains below the 50 level, supporting the case for lower levels.

· Gold and silver have edged lower at the EU open

Gold (-0.42%) and silver (-0.63%) are both trading marginally lower heading into the EU open as risk sentiment was positive overnight. The Nikkei 225 (2.35%) closed at its highest level since 1990 as Wall Street bourses made record highs. The ASX (0.68%) closed higher too while the Shanghai Composite (-0.17%) struggled. In the FX space, the antipodeans once again outperformed with AUD/USD (0.21%) and NZD/USD (0.28%) the best-performing pairs out of the majors.

In terms of news US politics still dominates the newswires. Outgoing US President Trump made a video condemning the actions of the protesters. Many political analysts say it is too little too late and Trump is looking to save face as he prepares for life after his presidency. Vice President Mike Pence is said to be against using the 25th amendment to oust Trump as it was suggested by various media outlets that this could be an option before Biden steps in the White House on 20th January.

Sticking with the US, tensions with China have escalated overnight as it was reported that the US confirms it's sending its UN ambassador to Taiwan. China is at odds with Taiwan and the US sending an ambassador over might anger officials in Beijing. The U.S. Trump’s administration has been supporting Taiwan with new arms sales and visits to Taipei by senior U.S. officials.

There were some central bank comments overnight, Fed’s Mester said he is optimistic about H2 2021 economic growth and it will be quite a bit stronger than 2020. We also heard from Fed's Bostic who stated the Fed may taper QE bond purchases earlier than expected.

Bitcoin once again it an all-time high printing marginally above 40K. This means the crypto major doubled in value within the month in an impressive rally.

Looking ahead to the rest of the session and highlights include the latest US job numbers (NFP), German industrial production, EU unemployment rate, Canadian employment numbers, Baker Hughes rig count and comments from Fed's Clarida.

· $2,000 gold to keep metals 'atop the leader board' in 2021, says Bloomberg Intelligence

Gold will be the asset to beat in 2021, according to Bloomberg Intelligence, which sees the precious metal outperforming U.S. stocks.

"Gold may gain increasing reference as the performance benchmark to beat," said Bloomberg Intelligence senior commodity strategist Mike McGlone.

Gold's price advance of 2020 appears to be sustainable, McGlone said on Tuesday, noting that the current resistance of $2,000 an ounce will become the metal's support.

"In an investment landscape increasingly dominated by how low -- or negative -- central banks will set base rates, along with rising debt-to-GDP and QE, we see the foundation solidifying under the price of gold. Resistance at about $2,000 an ounce in 2020 is set to transition to support in 2021," McGlone wrote.

With all the main drivers still supportive of higher gold prices, the precious metal is bound to continue beating U.S. stocks.

"The unlikeliness of reversing the unprecedented global fiscal and monetary stimulus that helped boost gold and copper about 25% in 2020 -- vs. less than 20% for the S&P 500 -- should keep the metals atop the leader board," McGlone pointed out.

For 2020 data, the strategist cited the Bloomberg All Metals Total Return Index, which gained almost 21%, beating the record-setting S&P 500 by about 3%.

"Our bias is that the greater potential for quantitative easing (QE) and debt-to-GDP levels to keep rising should keep metals prices -- notably gold and silver -- going up," McGlone said.

Also, more market volatility in 2021 will benefit gold to the upside. "It should be hard for gold to do anything but appreciate, particularly when the metal is in close proximity to its upward-sloping 12-month moving average," McGlone wrote.

The outlook for silver is also very positive, with the precious metal on the path towards $50, the strategist added.

"Silver is poised to keep outperforming in 2021 as it did in 2020. Silver's unique attribute as being about half precious and half industrial should keep it a top beneficiary of a favorable macroeconomic backdrop," he said. "New highs for gold in 2020 should mean it's a matter of time for similar moves in silver and most other metals."

McGlone specified that the path towards $50 is more sustainable this year than in 2011, with the new low being set at $12.

"We see the metal following a similar trajectory as the aftermath of the financial crisis toward $50 an ounce, but with greater potential for staying power on a path paved by gold," he said. "There's a good chance that the 2020 low at about $12 will be as enduring as about $8.50 from 2008, which hasn't traded since."

· US Dollar takes out 90.00 at the EU open with Gold and Silver moving sharply lower.

USD/JPY continues to move in lockstep with US 10yr yields

Reference: Bloomberg, Kitco, FXStreet