Today in the early Asian trading session, the yellow metal prices took modest bids on the day and struggled to extend its bullish bias. But the gains were capped by the upbeat market sentiment. Although, the yellow metal recently took a U-turn from $1,945.20 despite rejection to cross $1,955 twice during the previous day. However, the modest gains in the gold could be attributed to the broad-based U.S. dollar weakness, triggered after the unexpected rise in the number of U.S. initial jobless claims, which pushed investors toward the safe-haven yellow metal.
On the contrary, the possibility that the U.S. Congress keep trying to reaching an agreement over the latest stimulus measures exerted a positive impact on the risk sentiment and capped the further upside in the gold prices. Elsewhere, the reason behind the upbeat market sentiment could also be associated with the fresh optimism that the US-China trade deal talks likely happening "soon" despite political differences. This also helped the market trading sentiment and undermined the yellow-metal prices. Whereas, the on-going Iran-US tensions and coronavirus woes kept challenging the risk-on market sentiment and provided little support to the gold price. At the press, the yellow metal prices are currently trading at 1,943.75 and consolidating in the range between 11,940.82 and 1,956.05.
The yellow-metal prices had fewer things to cheer on the day. So, the broad-based U.S. dollar weakness was the main reason for gold's bullish run-up that was triggered after the surprising uptick in the number of U.S. initial jobless claims. At the data front, more than 1.100 million Americans claimed unemployment benefits during the previous week as per the latest report, also exceeded the forecasted 925,000 claims as well as last Thursday's 971,000 figure.
Meanwhile, the yellow-metal prices were further bolstered by the fears of a fresh lockdown in the U.K.'s Birmingham, and on-going virus wave 2.0 in the U.S. Moreover, U.S. Secretary of State Mike Pompeo, gave the warning to use all means to force the United Nations (U.N.) arms over Iran, which also favored the safe-haven metal prices.
On the contrary, the market trading sentiment got a boost by the hopes of serious COVID-19 aid package talks between the Republicans and Democrats, which favored the risk sentiment. The Republicans earlier showed a willingness to reach an agreement with Democrats for their proposed $500 billion packages. Whereas, the House Speaker Nancy Pelosi hinted that Democrats could cut their stimulus proposal in half to reach a consensus with Republicans.
Apart from this, the market trading sentiment was likely further bolstered by the trade-positive comments from China, regarding the phase-one deal, to help restore the market sentiment. It's worth mention that China's Commerce Ministry statement that China and the U.S. have agreed to hold trade talks "in the coming days." He also added that "The trade talks are scheduled to evaluate the progress made on their Phase 1 trade deal at the 6-month mark after it was reached in January." However, these comments were disapproved by the US Trump administration as they said that no talks were rescheduled as of yet.
At the USD front, the broad-based U.S. dollar reported losses on the day amid the doubts over the U.S. economic recovery, triggered after the dismal US Jobs data. However, the losses in the U.S. dollar helped the gold prices to stay higher. Whereas, the U.S. Dollar Index that tracks the USD against a bucket of other currencies was down 0.09% to 92.692 by 10:13 PM ET (3:13 AM GMT).
Daily Support and Resistance
Pivot Point 1942.47
Gold is trading with a neutral sentiment at 1,936 and continues to trade sidelong after breaking an upward trendline resistance mark of 1,962. The formation of candles beneath this mark can encourage selling sentiment in the market. Overall, gold has achieved 38.2% Fibonacci correction at 1,952 mark, and beyond this, the next resistance lingers at 1,968, which is stretched by the 61.8% Fibonacci level. Gold may gain support at 1,939 and 1,923 mark now. Good luck!