The longer-term outlook for the yellow metal stays upbeat as the global economy will continue to struggle amid the pandemic
Gold prices keep bleeding for the third consecutive day on Thursday, struggling to retain the recovery from September lows below $1,850. The precious metal was rejected from the 20-DMA at the start of the week and has been on the defensive since then.
The previous recovery attempts were tempered by upbeat developments surrounding vaccines by Pfizer and Moderna as well as by lingering hopes for further supportive measures from global central banks and governments amid the ongoing coronavirus pandemic. Yesterday, Pfizer and BioNTech announced that the efficacy of their COVID-19 vaccine trial has been completed, showing the vaccine to prevent 95% of cases of the disease. The news triggered a bullish reaction in risky assets, adding to the selling pressure surrounding the safe-haven gold.
However, as market optimism has waned already, being overshadowed by rising virus cases on both sides of the Atlantic and fresh lockdown measures, stock markets came back under pressure, suggesting the bearish potential in the gold market could be limited, with the longer-term outlook for the yellow metal staying upbeat as the global economy will continue to struggle amid the pandemic.
From the technical perspective, the short-term picture has deteriorated after failed bullish attempts at the 20-DMA that has been acting as resistance since the plunge seen on November 9. As of writing, the bullion was changing hands around $1,1863, off 1.5-week lows seen at $1,855 earlier in the day. In the short term, gold prices could continue to target the $1,850 support zone if the downside pressure persists.
In a wider picture, however, there is scope for upside in the medium as the metal could regain its appeal amid the persisting economic and political risks globally. On the upside, the immediate resistance arrives at $1,877 while a longer-term barrier lies in the $1,965 area.
