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  • Gold remains bid after posting the heaviest gains since November 05 the previous day.
  • Fears of virus strains’ resurgence, cautious sentiment ahead of Georgia runoff favor risk-off mood.
  • US-China tussle and dovish Fed also challenge the market sentiment.
  • Virus updates, US election news will be the key drivers amid a light calendar.

Gold buyers flirt with $1,945, the highest in eight weeks, during Tuesday’s Asian trading. The quote recently refreshed multi-day high while extending the previous day’s heavy run-up, the most since early November, as the coronavirus (COVID-19) fears gain momentum. Also backing the risk-off mood could be the cautious sentiment ahead of the Georgia election and the Sino-American tussle, not to forget an absence of major data/events.

Bulls cheer virus fears…

Concerns that the covid variants have a faster pace of infection and are resilient to the vaccines make policymakers in the UK, Japan and Europe worried amid a fresh surge in virus strain. To tame the pandemic, respective governments have already announced lockdown measures while eyeing vaccine moves. The latest update suggests Northern Ireland’s support to British activity restrictions and chatters over Japan’s likely ban for all foreign visitors.

It should be noted that the Georgian election is also the key event as it will decide who will hold the US Senate. While the Republicans are more likely to keep their power, the recent surprise victory of the Democrats keep traders guessing ahead of the event. As a result, cautious sentiment weighs on the risks. Furthermore, the US-Iran geopolitical tension renews and signals are stronger for further delisting of Chinese companies from the New York Stock Exchange (NYSE).

Against this backdrop, S&P 500 Futures drops 0.15% after Wall Street benchmarks closed with over 1.0% losses each during Monday. Also portraying the market mood is the US dollar’s bounce off the lowest since April 2018 and the US real yield’s plunge to a record low.

Given the lack of major data and dominance of risk catalysts over price moves, gold buyers will cheer for any further deterioration in virus conditions and/or activity restriction announcements. However, positives from Georgia and Fed policymakers’ signal to stay ready for further easing can test the upside momentum.

Technical analysis

Having successfully cleared a downward sloping trend line from August 07, at $1,899 now, gold is up for challenging November tops near $1,965.