Gold Price Analysis: XAU/USD wavers around $1,900 despite fresh US stimulus hopes
- Gold prices trim the early-day gains to $1,903.12, look for a firm direction on the daily chart.
- Risk tone recovers as US President Trump wants a bigger plan after House Speaker Pelosi gave Tuesday’s deadline to the White House.
- Brexit worries, virus woes challenge market optimism, China data dump eyed.
Gold drops to $1,900.45, after the day-start uptick from $1,898 to $1,903, during the early Monday morning in Asia. The yellow metal initially cheered recently increased hopes of the US coronavirus (COVID-19) stimulus. However, fears of no-deal Brexit and a wider wave 2.0 of COVID-19 challenged the bulls.
Will Tuesday break the US stimulus deadlock?
Having received an ultimatum to wrap-up the COVID-19 aid package talks from US House Speaker Nancy Pelosi, President Donald Trump crossed wires while saying that he wants a bigger plan than Pelosi. This is one of the many turns that US President Trump took after getting infected from the deadly virus. The reason could be spotted from his receding market favorite status as far as the November month’s presidential election is concerned.
Read: US Pres. Tump: Want a bigger stimulus deal than Pelosi's plan
However, the stalemate between the Democrats and Republicans are likely to continue as none wants to compromise while considering the political aspect ahead of the key elections. Even if Congress manages to break the monotony, passing of the law and availing the stimulus to the Americans will be a challenge less likely to be completed before the votes.
On the other hand, China marked another show of its fearless attitude towards the global ire over its export leader status. While passing a law to restrict the controlled export items, Beijing tried to defy calls, mainly amplified by the US, that it dumps the markets after entering any. This signifies the Sino-American rivalry and may weigh on the risk-tone.
Elsewhere, UK PM Boris Johnson is pushing British businesses to prepare for a no-deal Brexit after multiple failures to reach a trade deal with the European Union (EU) while the pandemic’s growth in the bloc, including London, also threatens the optimists.
Amid these plays, S&P 500 Futures mark 0.40% intraday gains to 3,477.
Looking forward, China’s third-quarter (Q3) GDP, coupled with September month’s Industrial Production and Retail Sales, will be watched for immediate direction while also giving priority to the risk catalysts. The key GDP is expected to rise to 5.2% YoY versus 3.2% prior and may extend the recent shift in the market’s mood. Also can favor the bulls are Industrial Production and Retail Sales that are anticipated to rise from 5.6% and 0.5% respective priors to 1.8% and 5.8%.
Technical analysis
Unless breaking a confluence of two-month-old resistance line and 50-day SMA, currently around $1,925/28, sellers can keep attacking an upward slopping trend line from September 28, at $1,893 now, to gain the short-term entry pass.