Gold Price Analysis — December 21

21 December 2020 | Updated: 21 December 2020

Gold (XAU/USD) has regained stability in the mid-European session, following a sharp dip to a three-day low earlier today. The drop came just a few hours after the precious metal recorded a fresh 41-day high around $1907. The decline was majorly sponsored by the strong pickup in US dollar (DXY) demand, which tends to undermine investor appetite for the dollar-denominated commodity.

The effect of the recently-approved $900 billion US COVID-19 fiscal stimulus got undermined by fresh worries over a rapidly-spreading new strain of the virus in the UK. This development reinstated demand for the greenback as a safe-haven currency and weighed heavily on the precious metal.

Meanwhile, renewed Coronavirus fears and a stalemate in the post-Brexit trade talks dampened global risk sentiment. The sharp drop across the equity markets is a testament to the risk-off mood, which has stalled any subsequent decline in gold for the time being.

Moving on, the yellow metal’s price dynamics will be at the mercy of the USD amid the absence of any market-moving economic data release from the US.

XAUUSD – Hourly Chart

Gold (XAU) Value Forecast — December 21

XAU/USD Major Bias: Bullish

Supply Levels: $1887, $1900, and $1907

Demand Levels: $1876, $1865, and $1850

Gold has had a rocky start to the week, as market sentiment was torn between bulls and bears. The commodity suffered a sharp drop from a six-week high around $1907, before finding fresh demand close to the $1850 pivot point.

That said, the yellow metal is currently battling to stay above $1876 crucial support, as bulls and bears remain at loggerheads. In the meantime, a sustained fall below $1876 seems unlikely, while bulls are likely to win this round and gradually take the precious metal back to the $1900 price point.

Note: Learn2.Trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.