- A combination of factors offers some support to gold prices on the last day of the week.
- Nervousness surrounding COVID-19, pessimistic expectations from the Fed, and falling bond yields remained favorable.
- The lack of additional buying warrants caution before opening new aggressive bull positions.
The prices of the gold (XAU / USD) move slightly higher during the European session on Friday, around the region of $ 1,865, although they lack strong continuation traction.
The precious metal has been unable to capitalize on the late bounce of the previous day, from near the $ 1,850 support area, and has remained trapped within a range amid conflicting signals of the US regarding the stimulus for COVID-19. News reports indicated that leaders Republicans and Democrats in the United States Senate had agreed to resume negotiations on another stimulus package for coronavirus. This, in turn, has limited any significant rally for the XAU / USD.
The positive development, to a greater extent, was offset by the decision of the US Secretary of the Treasury, Steven Mnuchin, to end some pandemic relief for distressed companies. The announcement has taken its toll on global risk sentiment and has been evident by further downward movement in equity markets. The flow of risk aversion, coupled with a dovish action in the price of the US dollar, has offered some support to gold prices., denominated in dollars, and has helped limit the decline.
Growing concerns about the economic consequences of the imposition of new restrictions due to COVID-19 in several US states have fueled the speculation about additional monetary easing by the Fed. This has been evident by the current drop in US Treasury yields, which has further benefited the yellow metal. Having said that, the lack of significant buying interest warrants some caution for aggressive bulls.
There is no major economic data release from the US on Friday. This makes it prudent to wait for some solid continuation buying before confirming that the XAU / USD has formed solid support near the $ 1,850 region and positioning for any further bullish moves.
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