- Gold extends Friday’s corrective pullback from multi-day low.
- Risks cheer easing of virus-led lockdown, US stimulus hopes amid a light calendar in Asia.
- S&P 500 Futures snap four-day losing streak amid Fauci’s warning over daily case levels, UK’s easing of virus-led lockdown.
- Fed cited downside risks to business, Fitch holds negative outlook on Australia.
Gold eases to $1,781, following an initial run-up to $1,788, during Monday’s Asian trading session. In doing so, the yellow metal keeps Friday’s recovery moves from the lowest since July 2020. While the US dollar weakness could be cited as the key fuel for the corrective pullback, risk-on mood, taking clues from the coronavirus (COVID-19) headlines and US stimulus, seem to back the buyers off-late.
Cautious optimism all around…
Following the lead of Australia, New Zealand and Israel, the UK is also up for easing the virus-led activity restrictions in the latest push to the market optimism.
British government strikes upbeat vaccinations and the recent reduction in the covid figures to flash hints of schools reopen and easy business guidelines during Monday. On the other hand, a top pandemic advisor to US President Joe Biden Dr. Anthony Fauci warned on Sunday, per CNBC, that Americans should steel themselves against a sense of Covid-19 complacency even as coronavirus infections plummet and some scientists predict that herd immunity is just around the corner.
Elsewhere, chatters over the US covid stimulus join hands with Fitch’s intact ‘AAA’ rating for Australia and hopes of no change in the RBNZ policies to favor the risk-on mood. Also, the Federal Reserve’s bi-annual report cited downside risks for the American businesses amid mixed data, which in turn heavied the US dollar.
While portraying the sentiment, S&P 500 Futures snap a four-day losing streak while taking rounds to 3,900 by press time.
Considering a lack of major data/events up for publishing in Asia, gold prices are likely to take clues from the US dollar and the risk catalysts. In doing so, the greenback’s performance after two consecutive weekly losses, for the first time in 2021, will be eyed closely.
Technical analysis
Although Thursday’s Doji favors further consolidation of recent losses, a downward sloping trend line from February 10, at $1,798 now, guards the commodity’s immediate upside. Meanwhile, a daily closing below $1,765 will be enough to direct gold towards the mid-$1,700s.
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