Gold Price Analysis: XAU/USD consolidates recent gains above $1,900
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Gold Price Analysis: XAU/USD consolidates recent gains above $1,900

  • Gold bulls catch a breather around three-week high near $1,930 flashed on Friday.
  • Fresh challenges to US stimulus, Brexit and the coronavirus news probe the metal’s latest upside.
  • Off in the US, light calendar in Asia restrict market reaction.

Gold takes rounds to $1,928/29, following the day-start weakness to $1,926.40, during the pre-Tokyo open Asian trading on Monday. The yellow metal rose to the highest since September 21 on Friday as the broad US dollar weakness, coupled with the risk-on mood, favored the buyers. However, the recent headlines concerning the American stimulus, Brexit and the coronavirus (COVID-19) question the bullion’s further upside. Even so, a lack of major catalysts and a long weekend at the US limit the downside momentum.

No takers for US Republican offer of $1.8 trillion stimulus…

On Friday, US President Donald Trump’s fresh bid for the coronavirus (COVID-19) stimulus, worth the $1.8 trillion, propelled global risk markets. The same dimmed the US dollar’s safe-haven demand and dragged the US dollar index (DXY) to the lowest in three weeks. The move helped commodities and Antipodeans the most.

However, the weekend headlines poured cold water on the face of optimists trying to extend gold’s latest run-up. Among them, US House Speaker Nancy Pelosi’s rejection of Trump’s offer and the COVID-19 fears from Europe has been the major negatives. Also in the line could be the Brexit updates suggesting no deal in sight despite reaching near to the October 15 deadline. It should be noted that the People’s Bank of China’s (PBOC) announcement of fresh measures to curb the yuan strength also couldn’t keep the gold bulls on the throne.

Amid these plays, S&P 500 Futures struggle for a clear direction near $3,470/75, near five-week high, whereas the other risk barometers like AUD/USD and AUD/JPY are also struggling for a clear direction by the time of the press.

Looking forward, gold buyers may find it difficult to extend the recent rally amid an absence of the US players and a light calendar. However, the yellow metal isn’t likely to fade its allure considering the current scenario.

Technical analysis

Having cleared a descending trend line from August 07, gold bulls need a clear break above the 50-day SMA, currently around $1,940. On the contrary, the metal’s fresh selling pressured below the immediate support line, previous resistance, near $1,911, can recall $1,900 on the chart.


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