Gold prices edged up on Wednesday as a recent rally in the U.S. dollar and Treasury yields hit a pause, while rising coronavirus cases worldwide also boosted appeal for the safe-haven metal.
Spot gold rose 0.1% to $1,856.86 per ounce by 0052 GMT, while U.S. gold futures gained 0.8% to $1,858.10.
Fundamentals
· Benchmark 10-year Treasury yields pulled back from 10-month highs, dragging the dollar lower and making gold cheaper for other unit holders.
· Global coronavirus infections rose to more than 91 million, with several Asian and European countries enforcing stricter restrictions to curb the spread of the virus.
· The Donald Trump administration said on Tuesday it is releasing millions of Covid-19 vaccine doses it had been holding back for second shots and urged states to offer them to all Americans over age 65 or with chronic health conditions.
· The U.S. House of Representatives plans to vote as soon as Wednesday on an article of impeachment charging President Trump with inciting insurrection after his supporters stormed the Capitol.
· U.S. job openings fell moderately in November, but mounting layoffs amid rampant Covid-19 infections supported views that the labor market recovery from the pandemic was stalling.
· The U.S. economy could see a strong rebound in the second half of this year as vaccinations become widely available, but the virus is still driving the economy and monetary policy will remain accommodative, Boston Federal Reserve Bank President Eric Rosengren said Tuesday.
· Gold Price Forecast: XAU/USD gathers pace to test $1872 hurdle ahead of US CPI
Gold (XAU/USD) extended the bounce from six-week lows on Tuesday, finishing the day with moderate gains well above the $1850 level. The recovery in the metal was enhanced by the retreat in the US dollar across the board, tracking the US Treasury pullback from 1-month highs. Markets assessed the demand for Treasuries amid expectations of a bigger fiscal stimulus under Biden’s presidency. Strong demand for the US bonds in the government auction on Tuesday also added to the downside in the yields. Meanwhile, a likely Trump’s impeachment also somewhat weighed down on the dollar.
Gold looks to build onto Tuesday’s rebound on Wednesday, with all eyes awaiting the US CPI report and the House vote on Trump’s removal from the Office after the deadly Capitol Hill attack. The greenback and the US rates continue their overnight weakness, which is likely to keep gold buoyed. Further, the US stimulus optimism and surging coronavirus cases in the US, Japan and China also boosts gold’s safe-haven appeal. However, the bounce in the global stocks amid a surge in oil prices and stimulus hopes could probably cap the gains in the precious metal. Markets will also pay close attention to the Fed speak amid recent tapering talks.
Gold Price Chart - Technical outlook
Gold: Hourly chart
As observed in the hourly chart, the gold price is struggling to clear the critical horizontal resistance seen at $1863. Note that the recent sell-off followed by the recovery has charted an ascending triangle pattern on the said timeframe, with $1863 is the likely pattern resistance.
Acceptance above that level could validate the bullish pattern, calling for a test of the bearish 100-hourly moving average (HMA) at $1872. Buyers could then aim for the 200-HMA at $1899.
On the flip side, the 21-HMA at $1854 offers immediate support, below which the 50-HMA at $1850 could guard the downside. The pattern support at $1841 is likely to be tested if the selling pressure intensifies.
· Silver was steady at $25.57 an ounce. Platinum rose 0.3% to $1,078.80, while palladium eased 0.4% to $2,382.44.
Reference: CNBC, FXStreet
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