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  • Gold keeps bounce off the lowest in 12 days.
  • Stock futures print mild gains amid stimulus, vaccine hopes but covid, hedge-fund frenzy tests the bulls amid month-end consolidation.
  • Updates on US infrastructure plan, virus/vaccine news and China-linked headlines will entertain traders amid a light calendar.

Gold prices struggle to extend late Monday’s recovery moves, recently easing to $1,711, amid the initial Asian session on Tuesday. The yellow metal dropped the most in four weeks to test the lowest levels since March 12 the previous day amid the US dollar gains. Though, a lack of major catalysts seems to have capped the bullion’s moves off-late.

Risks dwindle amid same old news”¦

With the news suggesting the US and Japan talk over Taiwan, the Sino-American tussle is likely to weigh on the risk-on mood after Beijing harshly criticized the Western approach the previous day. This follows US Trade Representative Katherine Tai’s rejection of easing tariffs on China as well as seeking “more positive and productive” trade ties with the EU.

Elsewhere, optimism over US President Joe Biden’s $3.0 trillion infrastructure plan fades amid tax hike chatters while the coronavirus (COVID-19) resurgence in the European Union (EU) and calls of $20 billion losses due to hedge fund manager’s mistake weigh on sentiment.

Meanwhile, upbeat vaccine developments and hopes of further stimulus, as well as cooperation among France, Germany and the UK over the covid battle, favor the risk-on mood. Additionally, the early signals for Friday’s US employment report suggest an upbeat outcome, which in turn favor the mood.

Amid these plays, S&P 500 Futures print mild gains but the strength of the US dollar index (DXY) and the 10-year Treasury yield portray mixed sentiment.

Looking forward, risk catalysts are likely to keep the driver’s seat while the moves of the US dollar and the Treasury yields will be the key amid a light calendar.

Technical analysis

A daily closing below 21-day SMA, around $1,724 by the press time, directs gold prices south toward the $1,700 threshold.