- Gold struggles to keep the previous two-day upside.
- Ex-Fed Chair, US Treasury Secretary Nominee Yellen backs Biden’s stimulus but backfires China, Trump’s investments.
- US President-elect Joe Biden will take oath as the 46th White House leader.
- Virus woes return amid fears of vaccine shortage, extended lockdowns.
Gold wavers around $1,841 after printing a two-day winning streak during the initial Asian session on Wednesday. The yellow metal’s bounce off multi-day-old support line, from March, joined the US dollar’s pullback to trigger the bullion’s recent recovery. However, the coronavirus (COVID-19) woes join cautious sentiment ahead of Biden’s inauguration party to challenge the risk-on mood.
Risks dwindle ahead of the key events…
Although S&P 500 Futures print 0.23% intraday gains during a three-day uptrend, stocks in Pacific and Antipodeans are less convinced of the upside momentum. The reason could be traced from the Senate speech of incoming US Treasury Secretary Yellen. While the ex-Fed Boss highlighting the urgency to combat the pandemic and record low-interest rates to back Biden’s stimulus, her signals for the second aid package, likely next month, also strengthened the market optimism. However, her indirect dislike for China and attack on President Donald Trump’s investment proposals joins the latest Sino-American tension to keep the risks heavy.
It should be noted that the Capitol Hill incident highlighted the risk of causalities during the White House party and hence enough security checks have been done during the delayed swearing-in ceremony of Biden.
On the other hand, reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada, not to forget Germany’s extended lockdown, also highlight the risks. In doing so, the market players ignore the recent improvements in the covid numbers from the northern hemisphere.
Looking forward, gold buyers are likely to keep US politics on the radar for fresh impulse while the virus updates and the US-China tension can join the watch-list. Given the cautious sentiment ahead of the key event, gold prices may remain sideways.
Technical analysis
Unless breaking the range between 200-day SMA and an upward sloping support line from March 2020, respectively around $1,846 and $1,825, gold prices are likely to remain indecisive.
