Gold Price Analysis: XAU/USD bulls flirt with $1,900 amid mixed clues

• Gold refreshes weekly top while rising for the third consecutive day towards the $1,900 mark.
• Covid woes regain traction even as vaccine hopes strengthen, US-Europe tension escalates without major audience.
• US $2,000 paychecks pending in the parliament as McConnells keeps a tab ahead of Georgia’s runoff.
• China’s official PMI, US stimulus, Brexit and virus are some of the key catalysts to watch.

Gold prices stay on the front foot around $1,895, up 0.10% intraday, during Thursday’s Asian session. The yellow metal recently gained bids amid a weak US dollar and cautious optimism in the market. However, the year-end sparse trading and a light calendar keep the bullion trader away from the desk.

Bulls firming up the grip…

Despite the lack of major play on the chart, gold buyers are gradually tightening their controls over the commodity as the US dollar stays heavy near April 2018 levels. The US dollar index (DXY) refreshed the multi-month low by dropping below the 90.00 round-figure the previous day, currently around 89.60, as US policymakers jostle over the $2,000 stimulus paycheck. Also weighing on the greenback could be the two cases of coronavirus (COVID-19) variant from Colorado and California, initially found in the UK.

On the positive side, global market players assume Joe Biden’s push for further stimulus to break the deadlock at Capitol Hill. Further, the covid vaccine and passage of the UK’s Brexit trade deal with the European Union (EU) are additional catalysts favoring the risks.

That said, S&P 500 Futures print mild gains after Wall Street benchmarks closed near record top.

Looking forward, China’s official Manufacturing PMI, expected 52.0 versus 52.1 prior, will offer immediate direction to the yellow metal prices but updates concerning the virus and US stimulus will be the key. It should also be noted that off in Japan can tame the trading moves in Asia.

Technical analysis

A clear break above an eight-day-old falling trend line, currently around $1,897, becomes necessary for the gold buyers before challenging the monthly peak of $1,906.87. Even so, the bullion sellers are less likely to enter until the quote stays above $1,875.