Gold Price Analysis — December 28

Gold (XAU/USD) has renewed its daily lows in the early European session, although it lacked any follow-through strength. The precious metal is currently trading around $1885 after reaching a daily low of $1877 a few hours ago.

The downward pressure on the US dollar (DXY) increased on the first day of the week, following President Donald Trump’s approval of a $2.3 trillion COVID-19 relief and government funding bill. This factor was responsible for the modest lift seen in the Asian session on Monday. However, the bullish jump lacked any follow-through strength and was strongly resisted by the $1900 psychological level.

The US stimulus announcement added to the recent Brexit optimism and bolstered investors’ risk appetite. This risk boost was evident in the equity markets, which dampened demand for the XAU/USD.

The current uncertain market mood makes it prudent for investors to stay on the sidelines and wait for a sustained move in either direction amid the holiday-induced liquidity shortage.

Meanwhile, the absence of any market-moving economic data releases from the US gold’s price dynamics at the mercy of the greenback. Additionally, fresh developments surrounding the COVID-19 pandemic could provide further influence on the yellow metal’s short-term price action.

XAU/USD Major Bias: Sideways

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

Demand Levels: $1876, $1865, and $1859

Gold has resumed the new week after the Christmas break in a choppy momentum. Following a sharp rally to the $1900 resistance, the yellow metal has fallen back to the $1880s. That said, further declines from this level should be capped by the $1870 mark, given that that level is the base of our 4-hour ascending trendline.

A sustained break to the upside will only be possible if the commodity snaps the $1900 barrier. Failure to do so could keep it in its consolidation range between $1893 and $1859.

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