- Gold struggles to keep corrective pullback from six-week low.
- US politics, virus woes battle fiscal relief hopes, Fed policymakers sound cautiously optimistic.
- Lack of major data/events highlights risk moves as the main catalysts.
Gold prices consolidate while picking up the bids near $1,848 during the initial Asian trading on Tuesday. Although US dollar gains weigh on the yellow metal, bears remain cautious amid hopes of US stimulus and a jump in global vaccinations. It should, however, be noted that the immediate moves have been directionless amid a light calendar and no major updates from the American politics and coronavirus (COVID-19).
Fed policymakers aim for upbeat 2021…
Following the upbeat comments from Richmond Federal Reserve President Thomas Barkin, suggesting the second half of 2021 to be strong, Head of the Dallas Fed Robert Kaplan said, hopeful later this year will meet ‘substantial progress’ bar for tapering QE (Quantitative Easing). It should be noted that both the policymakers have rejected claims of negative interest rates while sounding cautious optimistic during their latest speeches.
Elsewhere, the US politics is at its best to oust President Donald Trump even after Democrats failed in their first attempt of impeachment. Recently, House Democratic Leader Chuck Schumer was said to the seeking an emergency Senate meeting to weigh a second move on Trump’s impeachment. However, House GOP Leader Kevin McCarthy indicates to GOP there shouldn’t be a vote to impeach Trump this week, arguing instead there needs to be a bipartisan commission to get all the facts first, per sources on call, per CNN’s Manu Raju.
The US-China tussles continue as the Trump administration readies more sanctions while Beijing hates American interference in matters relating to Hong Kong and Taiwan. Recently, the UK was also heard to increase hardships for Chinese companies, via tightening laws on imports, as per the Telegraph.
On top of all these catalysts, the covid woes keep global policymakers on their toes as virus numbers and variant spread continue. On the positive side, a jump in the US and UK’s vaccinations, backed by the optimism of the key vaccine producers like Pfizer-BioNTech, keep the tab on risk-off mood.
Amid these plays, the US 10-year Treasury yields stay upbeat above 1.00% and help the US dollar index (DXY) to probe late-December tops. Further, the S&P 500 Futures print mild gains even as Wall Street benchmarked turned red on Monday.
Moving on, US political moves over Trump’s impeachment will be closely observed while chatters surrounding the Sino-American tension and the covid may offer extra impulse to gold traders.
Technical analysis
An absence of daily closing below 200-day SMA, coupled with a bounce off an ascending trend line from March 2020, keeps gold buyers hopeful unless witnessing a clear downside past-$1,816.
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