Search ForexCrunch
  • Gold remains pressured near the previous day’s low.
  • Risk sentiment recovers amid vaccine hopes, IMF comments but the pre-Fed caution probes the bulls.
  • US FOMC will be the key event while Aussie CPI, US Durable Goods Orders can entertain momentum traders.

Gold prices declined below $1,850, currently around $1,849, during the early Asian session on Wednesday. The yellow metal dropped the previous day even as the US dollar index (DXY), which has an inverse relationship with gold, slumped from the weekly top. Although the recent vaccine updates and cautiously optimistic IMF favor the commodity buyers, global traders await the US Federal Reserve’s first verdict of 2021 for fresh impulse.

Vaccine hopes entertain traders but not much…

Be it the booster shots or the Biden Administration’s announcement of further vaccines, not to forget vaccine producer’s confidence in taming the covid variants, the coronavirus (COVID-19) vaccine news had all that could please the market players.

Read: US President Biden: Recently discovered that vaccine program is in worse shape than we expected

Also favoring the mood were the comments from the International Monetary Fund (IMF) suggesting an upward revision to forecast for 2021 global economic growth to 5.5% versus 5.2% in October’s publication.

Furthermore, news that the European Central Bank (ECB) is to investigate the EUR/USD run-up also added to the risk-on mood but couldn’t highlight its presence.

Amid these plays, Wall Street benchmarks closed in red even as the S&P 500 refreshed record intraday top. That said, S&P 500 Futures is up 0.10% to 3,850 by press time.

Moving on, sentiment surrounding China and Australia can entertain traders in Asia ahead of the US Durable Goods Orders for December, expected 0.9% versus 1.0% YoY prior. However, the key will be the Federal Open Market Committee (FOMC) meeting that is expected to kick-start 2021 forecasts with a sober mood.

Read: Fed Preview: Fearing market froth or boosting Biden’s stimulus? Three scenarios

It should be noted that any updates over US President Joe Biden’s fiscal stimulus and the impeachment of ex-President Donald Trump will also offer intermediate moves to the market and hence become worth observing.

Technical analysis

10-day SMA near $1,850 offers immediate support to the yellow metal, suggesting a bounce to 21-day SMA, at $1,872 now. However, any further weakness below $1,850, which is less likely considering a recovery in MACD and recent risk-on mood, might not hesitate to challenge the monthly low of $1,802.