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Gold (XAU/USD) inched lower in the early European session on Monday and has recorded a fresh daily low of around $1825. The renewed selling pressure got sponsored by the prevailing upbeat market mood as a result of the blooming optimism over the rollout of COVID-19 vaccines by Pfizer (NYSE: PFE).
Investors’ risk mood got further bolstered by the news that the UK and the European Union have agreed to extend the post-Brexit trade talks, as both parties attempt to reach a compromise deal.
The risk-on market mood got highlighted by the leg up in the equity markets and a positive bounce in the US Treasury bond yield, which naturally undermines demand for the non-yielding metal. Furthermore, hopes for additional stimulus measures, and the prevailing bearish pressure surrounding the US dollar (DXY) failed to woo gold bulls or extend any support to the dollar-denominated commodity.
The greenback is currently languishing near a 30-month low amid fears of economic fallout from the imposition of stricter Coronavirus restrictions across several states in the US. Meanwhile, it is becoming more likely that the proposed bipartisan $908 billion COVID-19 stimulus package could be split in half to get approval by Republicans.
Moving on, traders will remain cautious around placing any aggressive bets on gold as markets anticipate the two-day FOMC monetary policy meeting, which commences tomorrow. That said, it is advisable to wait for a sustained drop before placing any trades.
Gold (XAU) Value Forecast — December 16
XAU/USD Major Bias: Sideways
Supply Levels: $1850, $1865, and $1876
Demand Levels: $1823, $1815, and $1800
Gold is currently trading within a consolidation range between $1850 and $1825. A sustained break above or below this range would determine what bias the XAU/USD will likely trade on in the coming days.
However, it is very likely to see a break towards the downside, given the fundamental factors surrounding gold. That said, a sustained break below the $1800 psychological level remains unlikely at the moment.
Source: https://learn2.trade
