- Gold is struggling to find a firm direction and remains trapped within a range on Tuesday.
- A good recovery in USD demand limits any significant rally in the precious metal.
- Weaker risk sentiment and falling US bond yields provide support for gold prices.
He oro moves between tepid gains and losses during the European session on Tuesday, remaining virtually unchanged on the day around the region of $ 1,855.
Following good price movements in both directions the day before and an initial rally to the $ 1,862 area on Tuesday, the precious metal has seen some selling and has come under pressure from a good recovery in demand for the US dollar. Doubts about the size and timing of the US stimulus has provided a modest rise to the US dollar, which in turn has affected the prices of gold, denominated in dollars.
Some Republicans have raised objections to the high price tag and rejected the idea of passing a $ 1.9 trillion stimulus package. proposed by US President Joe Biden. Adding to this, Democratic Majority Leader Chuck Schumer further questioned the timing, saying that a comprehensive agreement could take four to six weeks.
Meanwhile, obstacles to the US stimulus plan occur amid growing concerns about the possible economic consequences of the strict restrictions due to the coronavirus. Market concerns resurfaced after disappointing German data was released on Monday, raising expectations for a double downturn in European economies and clouding market sentiment.
Apart of this, escalating tensions between the United States and China in the South China Sea has also affected investor sentiment and has offered some support to the safe-haven XAU / USD. The reduced appetite for risk has been bolstered by a weaker tone around US Treasury yields, which has helped limit the fall of the yellow metal.
Furthermore, investors could also refrain from opening aggressive positions and prefer to wait on the sidelines before the latest FOMC monetary policy decision on Wednesday. This will be followed on Thursday by the release of the preliminary US fourth quarter GDP report, which should help determine the next directional move for XAU / USD.
Meanwhile, Tuesday’s release of the US Conference Board’s Consumer Confidence Index and US stimulus news could influence USD price dynamics. This, coupled with developments around the coronavirus saga and broader market risk sentiment, could help investors seize some short-term opportunities around XAU / USD.
Technical levels of gold
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