Gold Price Analysis: XAU/USD rebounds back to the $1950 area as dollar tumbles

• Gold consolidates recent gains, remains limited by $1950.
• DXY under pressure drops under 89.50 to test recent lows.

Gold rebounded from the $1940 zone to the $1950 area. The yellow metal climbed to $1951 and as of writing, it is hovering slightly below $1950, supported by broad-based dollar weakness.

During the American session, gold bounced to the upside but so far it failed to make a run clearly above $1950, even as currency pairs like USD/JPY dropped below Monday’s low.

The greenback is under pressure across the board. Better-than-expected economic data did not help the dollar. The ISM Manufacturing index rose in December unexpectedly to the highest level since 2018. On Wednesday, private employment data is due with the ADP report.

A key election in Georgia is taking place. The runoff will determine who controls the US Senate. The results could make an impact on markets sentiment.

Levels to watch

From a technical perspective, XAU/USD holds a bullish tone and is testing the $1950 resistance area. A break higher would expose the next resistance seen at $1970/75.  A slide below $1935 would suggest a sharper correction ahead.  The $1895/1900 is now a key support (horizontal level and short-term uptrend line) that if broken, could change the short-term bias to neutral/bearish.