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  • Gold prices fade Friday’s corrective pullback from $1,836.
  • Virus woes, US-China tussle weigh on the risks even as US stimulus hopes favor market optimists.
  • China data decorates Asian calendar, risk catalysts will be the key.

Gold wavers around $1,848-50 while extending late Friday’s recovery moves to early Asian trading session on Monday. Although the coronavirus (COVID-19) and the Sino-American tension challenge the risk sentiment, hopes of the US stimulus favor gold sellers.

Sellers remain hopeful on US fiscal relief expectations…

With the Democratic Party’s latest victory in the US Senate, their path to the White House and a clear dominance in the Congress becomes imminent. Markets cheer the Democratic victory due to the stimulus-friendly nature. Recently, US President-elect Joe Biden called for immediate further fiscal support after America’s December employment data exerted additional pressure on policymakers to act.

On the risk-negative side is the latest jump in the virus numbers from the UK and the US, as well as lockdowns in London, Japan and some parts of Australia and the US. Further, fears of the virus strain and the Sino-American tension are extra burdens on the risks. Japan has been the latest to spot the UK-found virus variant. It should be noted that the drive to negatively affect Chinese business and equities, mainly pushed by the US, recently gained momentum and is said to have pushed Goldman Sachs and Morgan Stanley to leave some products from Hong Kong.

Amid these plays, S&P 500 Futures drop 0.12% but AUD/USD cheers recently the upbeat performance of Wall Street benchmarks and the US 10-year Treasury yields.

Looking forward, China’s headline inflation numbers, namely Consumer Price Index (CPI) and Producer Price Index (PPI) for December, expected 0.1% and -0.8% respectively versus -0.5% and -1.5% prior, will be the key data to watch. Though major attention will be given to the risk catalysts wherein virus updates and US aid package news can be eyed.

Technical analysis

A clear downside break below 200-day SMA, currently around $1,841, becomes necessary for the gold bears to eye the mid-December lows near $1,820 and the $1,800 threshold. Meanwhile, 100-day SMA near $1,890 and the previous support line from November 30, at $1,920 now, become important upside hurdles.