Gold Price Analysis: XAU/USD bulls keep the reins at multi-year high beyond $1,800
- Gold prices pull back from $1,838.94 before taking rounds to $1,842.
- The US dollar’s fall, hopes of further stimulus and vaccine news favor the bullion buyers near the highest since September 2011.
- US Treasury Secretary Mnuchin cited deal on the fiscal package by the end of July, President Trump cited progress on talks.
- A light calendar will keep risk catalysts on the driver’s seat.
Gold prices stay bid around $1,841-42 amid the early Wednesday morning in Asia. The yellow metal refreshed the highest since September 2011 on Tuesday ahead of witnessing a pullback to $1,838.94 by the end of the day. The yellow metal cheers the USD’s fall, coupled with the lack of extra buying on the equities, amid expectations of further stimulus by the developed economies.
The party that never ends…
Be it the coronavirus (COVID-19) led risk-off or the recent weakness of the US currency, Gold buyers take benefits from all. The safe-haven is on the way to complete a fourth monthly winning streak after rising to the fresh multi-year high the previous day. The main culprit, US dollar index (DXY) slumped to the lowest since March 10 in the meantime.
While a sustained rise in the pandemic cases from the US increased hopes of America’s Phase 4 stimulus, European leaders’ agreement over 750 billion Euros of aid package also adds strength to the market’s rush towards the bullion. Further to increase buying momentum, vaccine news suggests that the cure to the pandemic is nearby.
Against this backdrop, Wall Street marked mixed closing with Nasdaq giving a part of the early-week gains. Further, the US 10-year treasury yields also dropped 1.5 basis points (bps) to 0.605% whereas S&P 500 Futures stays mildly positive around 3,250 by the press time.
Even if the economic calendar is lighter on Wednesday, mainly during the Asian session, updates concerning the US fiscal package discussions and vaccine news can offer intermediate moves to the precious metal. Additionally, any surprise announcements concerning the US-China tussle, which has been absent off-late will also offer a notable market reaction.
Technical analysis
A successful break of August 30, 2011 top surrounding $1,840 drives the commodity bulls towards $1,880 and $1,900 before attacking the record top of $1,921 flashed in 2011. However, any clear downside past-$1,840 can recall $1,800 on the chart.