Gold Price Analysis: XAU/USD regains $1,700 as US Senate passes stimulus

• Gold picks up bids while consolidating losses from nine-month low.
• US Senate passed $1.9 trillion covid stimulus, House vote expected to Tuesday.
• China warns America on Taiwan, Houthi Rebels accept attacks on Saudi oil ports.
• Risk news will be the key amid a light calendar.

Gold begins the week’s trading on a front-foot while crossing the $1,700 threshold, currently around $1,713, amid the initial Asian session on Monday. With its latest run-up in prices, the yellow metal seems to have cheered the US Senate’s passage of the coronavirus (COVID-19) aid package, as well as responding to the from China and concerning Saudi Arabia.

US inches closer to the much-awaited stimulus”¦

With the 50-49 votes for the bill known as American Rescue Plan Act, US democrats are up for rolling out the much-awaited fiscal relief. The $1.9 trillion aid package returns to the House after the Senate’s passage and is likely to be voted on Tuesday before running for President’s sign and being the law.

Other than the hopes of further fund inflow, which recently propelled the S&P 500 Futures and favored risks, the precious metal also benefited due to its safe-haven appeal. The reasons could be traced from China and Yemen.

China’s Foreign Minister Wang Yi urged the US, per Bloomberg, to “stop crossing lines and playing with fire” on Taiwan whereas Iran-backed Houthi rebels say they targeted Saudi oil port, said the Wall Street Journal (WSJ).

Elsewhere, China’s latest trade figures for January and February, published during the weekend suggest a 60% jump and favor the Antipodeans.

It should, however, be noted that the recent risk-on mood may fade if the market players chose to analyze the impact likely fund inflow due to the US stimulus. The reason could be traced from the reflation fears and the jump in the US Treasury yields.

Looking forward, a lack of major data/events will keep gold traders directed to the risk news. As a result, Treasury yields and the US dollar moves should be observed closely.

Technical analysis

Friday’s Doji candlestick on the daily chart near June 08 low suggests the yellow metal’s corrective pullback. Though, the gold buyers shouldn’t be hopeful unless the quote crosses November 2020 low near $1,765.