Gold Price Analysis: XAU/USD fades recovery towards $1,800 amid cautious sentiment
- Gold steps back from weekly top after snapping the two-day rally.
- Challenges to US President Biden’s infrastructure spending, covid updates test the bulls.
- S&P 500 Futures waver around 4,180, US Treasury bond yields dwindle.
- Pre-Fed mood battles mixed US data, downbeat DXY amid a light calendar.
Gold struggles to extend the first daily gains in the previous three while easing to $1,781 amid the initial Asian session on Tuesday. The yellow metal cheered the US dollar weakness at the start of the key week. However, cautious mood ahead of the crucial events and doubts over US stimulus, not to forget the coronavirus (COVID-19) woes, test the bulls of late.
Hard time of Democrats, pre-Fed mood weigh on sentiment…
With the latest US Consensus suggesting Republicans gain more control in the US Senate and the House, Democratic plans of more stimulus are in danger. “Texas will gain the most new House seats under newly-released Census numbers, while states in the Northeast and Midwest will lose 7 seats, shifting some political clout to Republican strongholds before the 2022 midterms,” said Bloomberg.
Elsewhere, the covid woes are also dominating market sentiment as India battles the worst crisis in history while leading, unfortunately, on the daily infections.
Meanwhile, the pre-Fed caution also plays its role and dampens the risk-on mood.
It should, however, be noted that global help for New Delhi joins the faster vaccinations in the West to keep traders hopeful.
Amid these plays, Wall Street closed mixed but the US dollar index (DXY) dropped to the fresh two-month low. Further, S&P 500 Futures struggle for a clear direction and takes rounds to 4,180 by the press time.
Talking about the US data, Durable Goods Orders for March eased below the market forecasts despite crossing the upwardly revised priors.
Moving on, gold could witness a sluggish day amid an absence of major data/events before the Federal Reserve (Fed) monetary policy meeting, up for publication on Wednesday. Though, traders may keep their eyes on the risk catalysts for intermediate moves.
Technical analysis
A clear bounce off the 10-day SMA and monthly support line, around $1,780–75, backs gold buyers to recalibrate for the $1,800 threshold and 100-day SMA near $1,803. It should be noted that the monthly top near $1,798 guards the commodity’s immediate upside.