Gold Price Analysis: XAU/USD bulls eye US covid stimulus update for fresh moves above $1,700
- Gold wavers in a choppy range after printing the heaviest gains in two months.
- Market sentiment stays positive amid hopes of US stimulus, economic recovery.
- CPI from China, US will decorate calendar, virus/vaccine updates shouldn’t be missed as well.
Gold prices seesaw around $1,715, recently easing, while portraying the cautious mood ahead of the key decision during the initial Asian session trading on Wednesday. In doing so, the yellow metal buyers seem to catch a breather after portraying the heaviest run-up in two months the previous day.
While tracing the moves, the market’s optimism towards the US coronavirus (COVID-19) aid package, estimated at around $1.9 trillion, has been the key. Also favoring the mood were positive headlines concerning the COVID-19 vaccines and hopes of economic recovery.
Against this backdrop, Wall Street benchmarks print bulls’ dominance while the US 10-year Treasury yield snapped a four-day winning streak with a 6.6 basis points (bps) decline to 1.528% by the end of Tuesday’s North American session. Further, the US dollar index (DXY) reversed from the four-month high as risk-on mood weighed on the greenback’s safe-haven appeal.
Recently, US Treasury Secretary Janet Yellen sounds optimistic while promising $350 billion of aid to the local and state governments, “as soon as possible”. The ex-Fed Chief also said, “City economies by end of 2021 will resemble 2019 much more than 2020.”
Given the cautious sentiment ahead of the US stimulus announcement, gold may witness a lack of upside momentum. As a result, traders should keep their eyes on February’s inflation data from China and the US for fresh impulse.
Read: US CPI February Preview: A perfect storm in the making?
Technical analysis
A corrective pullback from the seven-month-old falling trend line, currently around $1,672, eyes to revisit the area around mid-$1,700s. However, bulls are less likely to get convinced unless witnessing a clear break above November 2020 lows near $1,765.