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  • Gold trims pullback moves from one-week high, flashed the previous day, picks up the bids below $1,840.
  • Risks dwindle as traders await key inflation data from China, the US with eyes on the American covid relief package.
  • US dollar bears catch a breather and so do bond buyers.

Gold stays firmer around $1,838 amid the initial Asian session trading on Wednesday. In doing so, the yellow metal keeps the latest upside momentum intact while eroding the consolidation from the one-week top. Although mixed sentiment troubled the yellow metal buyers, US dollar weakness and a pause in the Treasury yields’ run-up seem to have favored the bulls.

Bulls stay hopeful…

The recent pause in the upside momentum challenges the gold buyers near the resistance line of a five-week-old falling wedge. However, increasing hopes of the much-awaited US covid relief stimulus and optimism concerning the coronavirus (COVID-19) vaccines favor the commodities.

Additionally, fears of the reflation risks could also gain momentum, mainly due to the recent money supply and likely more aid, which in turn can weigh on the market sentiment to back the bullion buyers.

It should, however, be noted that the pre-data and ahead of the aid package caution probe the market’s risk tone off-late. Also adding to the confusion could be the mixed data from the US. Recently, the US JOLTS Job Openings grew more than expected in December but NIFB’s small business sentiment gauge eased for January.

Amid these plays, the Wall Street benchmarks ended Tuesday’s North American session on a mixed note while the US 10-year Treasury yields dropped for the first time in eight days.

Looking forward, US stimulus chatters in the Senate and Consumer Price Index (CPI) from China and America, for January, will be the key. While a likely mixed data from China can help the gold prices, weakness in the US prices may probe the metal’s upside. Above all, any surprises from the US Congress, relating to the COVID-19 aid package, could propel the market moves.

Technical analysis

21-day SMA near $1,842 probes the short-term bullish pattern confirmation. However, the RSI and MACD conditions suggest further upside towards the late January top near $1,875.