The yellow metal is trading marginally higher after three consecutive days of declines
Gold prices briefly jumped above the $1,900 handle at the start of the week but failed to preserve gains and retreated amid profit-taking as dollar demand surged. As a result, the precious metal has settled between the 100- and 20-DMAs, struggling to stage a more sustained and robust recovery as demand for the bullion remains weak.
On Wednesday, the yellow metal is trading marginally higher after three consecutive days of declines, with the $1,870 figure representing the immediate barrier for bulls while on the downside, the $1,860 region remains in focus.
According to the latest developments, US President Donald Trump refused to sign a $900-billion pandemic relief package approved by US Congress and asked for an amendment to the measures. The renewed concerns about a $900-billion stimulus package keep gold prices on the back foot despite a modest bullish bias.
On the other hand, the greenback is back under pressure after weak US consumer confidence data. This in turn cushions the downside in gold. In the short-term, the precious metal will likely stay in a familiar range in pre-Christmas thin trading conditions.
In a wider picture, the bullion could derive support from a weak dollar that remains within a broader bearish trend and could stay on the defensive if the global economic recovery accelerates in 2021. On the other hand, should the vaccination turn out less effective than expected, and the recovery process disappoint, the safe-haven gold could regain its appeal and exit the downtrend in the medium- to long-term. Besides, a potential wider spread of the new coronavirus strain that threatens further lockdown and travel bans could ease the selling pressure surrounding the yellow metal.
If the mentioned $1,850 immediate support gives up any time soon, the 20-DMA (today at $1,843) will come back into market focus. Should the downside pressure intensify further, the prices could derail the 200-DMA around $1,820.