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  • Gold consolidates near the monthly low of $1,860 flashed the previous day.
  • Bears cheer the US dollar strength amid upbeat data from America, challenges to risk.
  • Lack of key data in Asia keeps risk catalysts in the spotlight.

Gold prices drop to $1, 866.36 amid the initial Asian session trading on Friday. The bullion dropped to the fresh low since September 28 on Thursday as the King dollar benefited from the upbeat US data and risk-off mood. However, a lack of major catalysts after the US session pushed the metal traders to look for extra hints before stretching the two-day downtrend towards challenging the monthly low of $1,860.

USD strength gains the market’s attention…

US dollar’s inverse correlations with gold keep the commodity depressed around the monthly low as the greenback cheers upbeat US data, challenges to the risks and the ECB’s dovish rhetoric. It should also be noted that the hopes of Democratic victory in the upcoming US presidential elections and the USD’s following run-up also directed the market players to the US currency.

Not only the upbeat prints of the US third quarter (Q3) GDP, 33.1% versus 31% forecast, but the easing in Initial Jobless Claims 4-week Average from upwardly revised 812.25K to 787.25 for the period ended on October 23 also favored the US dollar bulls. Alternatively, the ECB’s strongest signals of the upcoming monetary easing backed the Euro bears and supported the USD in turn. Additional catalysts like the worsening of the coronavirus (COVID-19) in Europe and the US join the market’s cautious mood ahead of the next week’s key US elections to highlight the risks.

As a result, S&P 500 Futures part ways from its benchmark on Wall Street while declining by eight points or 0.25% intraday by press time.

Considering a light calendar in Asia, other than the inflation data from Japan, gold traders will keep eyes on the key risk events for near-term directions. Among them, the covid headlines and stimulus updates may keep weighing on the metal provided the US dollar index (DXY) stays bid near the monthly high.

Technical analysis

Not only a 100-day EMA level of $1,870.70 but an ascending trend line from April 01, currently around $1,901, also challenges the metal buyers while fresh selling awaits a clear downside break below the September month’s low near $1,848.