Gold Price Analysis: XAU/USD consolidates in a range around $1835 region

• The optimism over the rollout of COVID-19 vaccine exerted some pressure on the safe-haven gold.
• Stalled US fiscal stimulus talks, Brexit uncertainties extended support and helped limit the downside.

Gold lacked any firm directional bias on Friday and was seen oscillating in a narrow trading band, around the $1835 region through the early European session.

The optimism over the rollout of vaccines for the highly contagious coronavirus disease revived hopes for a swift global economic recovery and undermined the precious metal’s safe-haven demand. In the latest development, the US authorities voted overwhelmingly to endorse emergency use of Pfizer’s COVID-19 vaccine.

However, a combination of factors extended some support and helped limit any deeper losses for the XAU/USD, at least for the time being. Thursday’s disappointing release of US Initial Jobless Claims added to market worries about the potential economic fallout from the continuous surge in new coronavirus cases.

Adding to this, the uncertainty over the latest US fiscal stimulus measures and post-Brexit trade talks weighed on investors’ sentiment. This, along with the prevalent strong bearish sentiment surrounding the US dollar, further held traders from placing any bearish bets around the dollar-denominated commodity.

It is worth reporting that the US lawmakers approved a stopgap government funding bill on Wednesday but have been struggling to hammer out an agreement on the proposed relief package. On the other hand, a key summit between the UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen ended without any apparent progress.

This makes it prudent to wait for some strong follow-through selling before confirming that the recent bounce from multi-month lows has already run out of the steam and positioning for any further depreciating move. Market participants now look forward to the US macro data for some short-term trading impetus.

Friday’s US economic docket features the releases of Producer Price Index and revised Michigan Consumer Sentiment Index. The data, along with the US stimulus headlines, might influence the USD price dynamics. Apart from this, the broader market risk sentiment could further produce some short-term opportunities around the XAU/USD.

Technical levels to watch