Adding to a bearish outlook, the metal struggles to overcome the 100- and 200-DMAs
After a rejection from the $1,790 area, gold prices finished lower yesterday while regaining a slight bullish bias on Thursday. Further clinging to familiar levels, the bullion is changing hands marginally above the $1,780 figure during the European hours. The precious metal still remains below the $1,800 figure and could keep trading on the defensive amid rising hopes that the Fed will likely accelerate the reduction in bond-buying next week.
On the other hand, markets remain cautious ahead of incoming Omicron updates worldwide. This in turn helps limit the downside pressure surrounding the yellow metal. Of note, the World Health Organization noted yesterday that the omicron variant of Covid-19 has now been detected in 57 countries and continues to spread rapidly in South Africa. According to predictions from the European Centre for Disease Prevention and Control, the new virus could become the dominant variant in Europe within months. However, more data is needed to determine omicron’s infectiousness and severity, WHO highlighted.
Meanwhile, the dollar looks relatively steady these days, lacking safe-haven demand, which, in turn, makes the XAUUSD pair struggling for direction. But the downside pressure could reemerge if the greenback rallies due to a potentially bullish US CPI report due on Friday. In this scenario, the precious metal may challenge the $1,770 immediate support and finish the week on the defensive. So far, gold prices are trading unchanged on the weekly charts.
Adding to a bearish outlook, the metal struggles to overcome the 100- and 200-DMAs in the $1,790-$1,792 region. Should this zone give up, the next barrier would be represented by the $1,800 mentioned psychological level. This figure will likely continue to act as resistance for the gold bulls in the coming days, as downside risks keep persisting at this stage.