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  • Gold seesaws in a choppy range below $1,895.50 after marking the biggest losses in over a week.
  • US dollar gains disappoint the bullion buyers, growing pessimism concerning the American stimulus occupy headlines.
  • Fears of a worsening virus, no-deal Brexit and China’s tussle with the West add challenges to the market sentiment.
  • US PPI, Fedspeak can offer additional catalysts to watch.

Gold prices seesaw between $1,888.65 and $1895.50, currently around $1,892.80, amid the initial Asian session on Wednesday. In doing so, the yellow metal consolidates the previous day’s losses, the heaviest drop since October 06, from the one-week low of $1,886.58. Although nothing changes the market’s downbeat mood, a lack of major catalysts and a pause after the heavy fall seem to justify the commodity’s latest pullback.

Bears dominate ahead of the key events…

Be it the US presidential election or the Brexit deal deadline, a flow of risk-negative headlines keeps global investors pessimistic. While a lack of consensus among the US Congress over the coronavirus (COVID-19) is in the spotlight, no sign of a deal from the trade talks between the European Union (EU) and the UK also contributes to the market fears.

Also joining the list of negatives could be the latest halts in the COVID-19 vaccine trials by the Johnson and Johnson as well as Eli Lily. Further, growing dislike for China and the dragon nation’s urge to fight back the US and Australia offer additional challenges to the market’s risk-tone sentiment.

On the data front, soft US inflation numbers, downbeat ZEW Survey outcome and mixed results of China’s trade figures also drove traders towards the risk-safety, which in turn helped the US dollar index (DXY) to print the highest gains in three weeks. The US dollar gains not only proved its negative correlation with gold prices but also dragged Wall Street down as Treasury traders returned from Monday’s Columbus Day holiday.

Alternatively, the International Monetary Fund (IMF) upwardly revised its World Economic Outlook while expecting the global economy to mark 4.4% contraction in 2020 versus the previous forecast of -5.2%. The update also praised China for its economic recovery while anticipating a 1.9% growth for the current year.

Even so, fears of no US aid package before the American elections and a hard Brexit, not to forget about the delay in the COVID-19 vaccine, could keep haunting the markets. As a result, the US dollar may extend recent gains and can negatively affect the yellow metal prices unless any surprises erupt from the economic calendar, which is less likely.

Technical analysis

Unless declining below an ascending trend line from September 28, at $1,891 now, bears are likely to keep $1,900 on their radar as an immediate target.