Gold Price Analysis: XAU/USD consolidates losses below $1,950 amid risk reset

• Gold trades in a choppy range below $1,950, keeps pullback moves from one-week low of $1,932.88.
• Federal Reserve hints stress test for large banks, UK scientists suggest a two-week national lockdown.
• Odds of no-deal Brexit recede but the US-China tussle is regaining momentum.
• A light calendar will keep traders directed towards risk catalysts.

Gold prices picked up bids in a small trading range between $1,942.34 and $1,949.60, currently around $1,946, during the pre-Tokyo open Asian trading on Friday. The yellow metal dropped to the lowest since September 09 on early Thursday before recovering to $1,949.61. While risk factors flash mixed signals, US dollar weakness and a lack of major data/events could be cited for the bullion’s latest sideways performance.

Challenges to market optimism gradually firm up…

The recent news from the Federal Reserve, suggesting another stress test for large banks, joins the scientific advice for the UK PM Boris Johnson to announce a two-week national lockdown to probe the global market sentiment. Also in the line could be comments from China’s state media that directed warned the US with the, “use non-peaceful and other necessary means to solve the Taiwan question once and for all.”

On Thursday, BOE’s hints for the negative rates joined mixed data from the US to ward off the Fed’s show of mildly positive economic outlook and reluctance to rate cut, at least for the short-term. Also on the risk-positive side was news that the EU Commission President Ursula von der Leyen is still hopeful of the Brexit deal.

Amid all these plays, S&P 500 Futures print 0.17% gains after the Wall Street benchmarks flashed losses on Thursday.

Looking forward, global traders may catch a breather after the past few day’s rollercoaster rides amid an absence of any major data/event in Asia. However, the risk catalysts keep the driver’s seat and hence market players are advised to stay cautious.

Technical analysis

A 50-day SMA level of $1,935 offers intermediate strong support inside a monthly triangle formation that restricts gold’s short-term moves between $1,923 and $1,964.