The precious metal slipped below the descending 20-DMA and looks poised for further losses
Gold prices continue to struggle since a strong rejection from two-week highs earlier this week. The precious metal slipped below the descending 20-DMA and looks poised for further losses in the short term. as of writing, the bullion was changing hands around $1,832, off this week’s lows in the 41,825 area.
The widespread optimism over the rollout of vaccines has put some pressure on the safe-haven yellow metal this week. according to the latest reports, the US authorities voted overwhelmingly to endorse the emergency use of Pfizer’s COVID-19 vaccine. This in turn fuels upbeat expectations surrounding the economic recovery globally in 2021.
On the other hand, stalled US fiscal stimulus talks and Brexit-related uncertainty help to limit the downside pressure on gold. As a reminder, the latest meeting between the UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen ended without any apparent progress. Also, weak dollar demand caps losses in the precious metal but doesn’t fuel its recovery.
Yesterday’s disappointing release of US initial jobless claims added to market concerns over the potential economic fallout from the ongoing coronavirus pandemic and thus helped to limit deeper losses for the XAU/USD pair.
Today, investor sentiment looks mixed, with uncertainty persisting. If the tone continues to deteriorate in the short-term, the precious metal could trim this week’s losses ahead of the weekend. If so, XAUUSD may regain the $1,840 region by the end of the day. Otherwise, the bullion could get back below the $1,830 figure. At the moment, the 20-DMA acts as the immediate resistance, which implies that the least path of resistance is to the downside now.
In a wider picture, gold sees stronger dynamics this month than in November. However, if vaccination continues across the globe, a so-called Santa Claus rally in stock markets could send the metal lower by the end of this year.