- Gold recover attempt was capped at $1,914 to test support at $1,895 again.
- XAU/USD lost ground with the US dollar picking up.
- Uncertainty about US stimulus has boosted risk aversion.
Gold’s upside attempt witnessed during the Asian and European trading sessions has been halted at $1,914 on the Early US session as market sentiment plunged and the precious metal has dropped to find support at $1,895.
XAU/USD loses footing with the USD coming up
Gold futures have dropped nearly $20 from session highs, with equity markets moving into negative territory after having opened with moderate gains. The Dow Jones Index is trading 0.6% lower with the Nasdaq 0.4% below the previous closing.
Risk appetite has taken a hit during Friday’s North American session, as the investors grew increasingly anxious about the lack of progress in the US coronavirus stimulus negotiations. This has boosted demand for the safe-haven US dollar and has weighed on gold futures.
The market, however, is pricing in a Democrat victory on November 3 that would pave the path to a large relief package to support economic recovery. This is keeping US dollar bulls on check although the uncertainty about the election’s outcome might contribute to strengthening the USD as the polling day approaches.
Downside contained at $1,895
Below $1,895 support area (October 20, 22 lows) the pair might find support at $1.880 (October 8, 13 lows) and $1,872 (October 7 low). On the upside, the pair should return above the 50-day SMA, at $1,922 to ease bearish pressure and extend towards $1,934 (October 12 high) and $1,971 (September 26 high).
Technical levels to watch
Credit: FX Street