Gold Price Analysis: XAU/USD struggles to keep bounce off eight-day low below $1,850, eyes US Q4 GDP

• Gold fades the corrective pullback despite snapping two-day losing streak.
• Fed marked dovish halt, Powell tried to placate bears.
• ECB’s Knot, EU-UK tussle over vaccine and uncertainty concerning US stimulus also heavy the risks.
• US Q4 GDP may confirm slow growth, risk catalysts also become important.

Gold eases to $1,842 during the early Asian trading on Thursday. The yellow metal dropped to the lowest in eight days on Wednesday before bouncing off $1,831. While the US Federal Reserve’s downbeat statement and hints of further negative rates from the ECB policymaker weighed on the yellow metal, cautious optimism by Fed Chairman Jerome Powell conveyed afterward seems to have triggered the latest corrective pullback. However, the bulls aren’t convinced and remain cautious ahead of the US Q4 GDP.

Cautious sentiment prevails…

Be it the downbeat hints from the ECB policymaker Klass Knot or the US Federal Reserve’s statement, major central bankers accept the economic uncertainty and show readiness to act. In doing so, the Dutch Governor signaled further negative rates by the ECB whereas the Fed confirmed moderate economic activity and employment. However, Fed Chairman Jerome Powell unveiled recovery hopes and soothed pains, for now.

Read: Powell speech: Jury is out on whether there will be economic scarring

Elsewhere, the European Union (EU) and the UK keep struggling over the vaccine shortage in the bloc. The latest update from the Financial Times suggests the region demands UK vaccine to fill the AstraZeneca vaccine shortfall.

Also weighing on the risks could be the wait for the US President Joe Biden’s $1.9 trillion fiscal stimulus as the American Congress is still jostling over the much-awaited aid package. Furthermore, the Sino-American tension, recently over the South China Sea, exert extra pressure on the market mood.

Against this backdrop, Wall Street benchmarks dropped over 2.0% each while the S&P 500 Futures lose 0.45% by press time.

Looking forward, risk catalyst can offer intermediate direction to the yellow metal traders ahead of the preliminary readings of the US Q4 GDP, expected 3.9% QoQ versus 33.4% prior. Although signals from Powell have already confirmed a downbeat print, any more disappointment can drag the yellow metal further towards the south.

Technical analysis

Lower high formation since January 21, coupled with the sustained downside break of 200-day SMA, at $1,850 now, favor gold sellers seeking a fresh monthly low under $1,800.