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Despite a green day last Friday, gold fell for the second straight week and held onto the critical $1850 support. XAU/USD bulls insist but the yellow metal is not out of the woods yet. All eyes remain on US Markit PMIs, covid and vaccine updates, FXStreet’s Dhwani Mehta reports. 

Key quotes

“Gold clings onto the recent recovery gains so far this Monday, benefiting from the persistent weak tone seen around the US dollar amid the vaccine optimism. Increased expectations over the rapid rollout of the covid vaccines on both sides of the Atlantic weigh on the safe-haven greenback.”

“Gold’s upside could be capped by the risk-on rally in the global stocks. On the macro front, the US Preliminary Markit Manufacturing and Services PMIs will be featured later in the NA session. Also, the global covid statistics and vaccine updates will be closely followed.”

“Gold remains capped below the horizontal 200-hourly moving averages (HMA) at $1877, which is tough not crack for the XAU bulls. Meanwhile, the upward-sloping 21-HMA at $1871 offers immediate support.”

“Acceptance above the 200-HMA barrier at $1877 is critical to reviving the recovery momentum from the powerful $1850 support area. The next upside target is aligned at $1900.”

“On the flip side, 50-HMA at $1867 is the relevant support, below which the October low of $1860 could be tested. Only a daily close below $1850 could call for a resumption of the correction from record highs of $2075.”