Gold has rebounded sharply yesterday with gains of 1.45% from monthly lows as the US dollar pulled back. The pair is gaining again after making a quick daily reversal. XAU/USD is trading now close to $1865, at the peak level since November 23, after rising more than $40 from the daily low.
The price of Gold accelerated after breaking above the $1850 area. The gains to the upside started as the US dollar weaken across the market. The dollar failed to hold onto gains and retreated sharply.
Global risk has intensified as the US-China brawl heats up after the Trump administration announced new sanctions on Beijing diplomats while Hong Kong police arrested a more of the opposition leaders. Additionally, worsening Covid-19 conditions in the US, Tokyo and Hong Kong dim vaccine hopes while doubt surrounding Brexit and US stimulus keep traders watchful and favor the safe haven metal.
A solid break above $1,869 will give a green light to the gold traders targeting $1,890 upside resistance, comprising 61.8% Fibonacci retracement level on the one month (1M).
A decline back below $1850 in gold would alleviate the positive momentum. The next support is seen at $1820 and then at $1800. Below the last one, the recent bottom would be exposed.
Further, traders will be watching the Brexit situation headlines while stimulus updates and Covid-19 news can add to the market players’ amusement. In addition, further worsening of the Chinese-American relations can escalate risk-off mood and may recall the $1,900 on the chart.
On Gold we remain bullish for today until the Covid-19 vaccine is announced to be distributed in more countries. Traders will also be watching any Brexit deal and US-China relations headlines.
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