The XAU/USD pair battles to defend the $1,800 price line, but grinds above around the $1,809 price, as of Wednesday’s Asian session trading gains momentum.
The yellow metal refreshed weekly high the previous day before stepping back from $1,825, providing a daily negative closing. In doing so, the gold traders failed to conquer the key technical levels, namely multi-day-old resistance line and 200-DMA.
Optimism surrounding US President Joe Biden’s infrastructure spending bill and hopes of a strong Q2 earnings season could be cited as the key catalyst for the risk-on mood. Also, on the positive side were
Elsewhere, US Housing Starts and Building Permits eased in June, providing another reason for the US Federal Reserve (Fed) to defend the easy money policy when they meet next week. The same helped markets to stay cautious positive.
Also negative for the market sentiment were the latest study on the Johnson & Johnson covid vaccine suggesting lesser immunity over the virus strain.
Wall Street benchmarks were bullish. Furthermore, the Volatility Index (VIX) dropped from a two-month top whereas US 10-year Treasury yields extend recovery from February lows to 1.22%. Most importantly, the US Dollar Index remained strong for the fourth consecutive day to challenge April’s top.
To conclude, a light calendar and cautious sentiment ahead of Thursday’s ECB, not to forget next week FOMC, gold prices may remain sidelined. However, covid troubles and stimulus revises could amuse commodity traders wherein the US dollar strength could weigh on the quote. We expect gold to range between 1825 and 1800 price channel.
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